EarthLink Incorporated

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EarthLink to Announce Second Quarter 2008 Earnings

www.prnewswire.com

ATLANTA, July 8 /PRNewswire-FirstCall/ -- EarthLink (Nasdaq: ELNK) today announced it will host a conference call on Tuesday, July 29, 2008, at 8:30 a.m. EDT to discuss its second quarter 2008 financial results. The earnings press release will be issued at 7:00 a.m. EDT.

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/www/story/07-08-2008/0004845053&EDATE=

Virgin Mobile to Acquire Helio

www.phoneplusmag.com | Jun 27, 2008

Call it a tale of two business models: Successful MVNO Virgin Mobile USA Inc. will take over struggling MVNO Helio for $39 million, the companies announced on Friday. Like Virgin Mobile, Helio uses Sprint-Nextel Corp.

http://www.phoneplusmag.com/hotnews/mvno-virgin-mobile-to-acquire-helio.html

Virgin Mobile USA to acquire EarthLink's Helio

www.bizjournals.com | Jun 27, 2008

EarthLink Inc. and SK Telecom will sell their Helio joint venture to Virgin Mobile USA Inc. in a stock deal worth $39 million, the companies reported Friday. The sale is expected to close in the third quarter, Virgin Mobile (NYSE: VM) said.

http://www.bizjournals.com/atlanta/stories/2008/06/23/daily98.html?ana=from_rss

Last minute save keeps Philly Wi-Fi alive

www.rcrnews.com | Jun 18, 2008

A group of private equity investors has rescued the municipal Wi-Fi network in Philadelphia, the city announced yesterday. ... - Phil Carson

http://www.rcrnews.com/apps/pbcs.dll/article?AID=/20080618/FREE/445142313/1014/rss01

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Spammers plead guilty after EarthLink probe | Tech News on ZDNet

news.zdnet.com

Jared Cosgrave and Mohammed Haque pleaded guilty last week in a U.S. District Court in Southern Florida to charges of fraud and violation of the Can-Spam Act. Sentencing is scheduled for Nov. 16, and the two could get up to three years in jail and be given a fine of up to $250,000.

http://news.zdnet.com/2100-1009_22-6122249.html

EarthLink succeeds with SAS

EarthLink has capitalized on the mantra that it’s cheaper to keep existing customers than acquire new ones. So when it decided to expand from a traditional ISP into new lines of business, it wanted to make sure that it kept its existing base of customers engaged.

http://www.sas.com/success/earthlink.html

VM: Agreement to Acquire Joint Venture of SK Telecom and EarthLink - Zibb.com

www.zibb.com

By Fain Hughes, fhughes@knobias.com Virgin Mobile USA, Inc. (VM) has entered into an agreement to acquire Helio, a joint venture between SK Telecom and EarthLink, Inc. (ELNK), providing highly advanced postpaid products and services with unique user applications. Under the terms of the agreement,

http://www.zibb.com/article/3507635/VM+Agreement+to+Acquire+Joint+Venture+of+SK+Telecom+and+EarthLink

EarthLink to offer TiVo boxes with DSL | CNET News.com

news.com.com

Customers who sign up for EarthLink's DSL (digital subscriber line) Internet access will be offered a TiVo Series 2 device and TiVo's service, with rebates on the cost of the DVR, according to an EarthLink representative.

http://news.com.com/2100-1038_3-6164951.html

 

EarthLink appoints two new board members - Zibb.com

EarthLink, an internet service provider, has appointed Susan Bowick and David Koretz to its board of directors.

Ms Bowick will serve on EarthLink's leadership and compensation committee and its corporate governance and nominating committee. Mr Koretz will serve on the company's audit committee, and its corporate governance and nominating committee.

EarthLink also announced the retirement of Linwood Lacy from the board of directors. Mr Lacy served on the board of EarthLink (and its predecessor EarthLink Network) since 1996 and served as chairperson of the leadership and compensation committee since 2000.

Ms Bowick is a member of the board of directors of Comverse Technology, where she serves as the chairperson of the compensation committee and a member of the audit committee.

Ms Bowick has served as a consultant to several global technology companies, including the joint venture of Nokia Corporation and Siemens. From 1977 to 2004, Ms Bowick served in various executive positions with Hewlett-Packard Company, most recently as executive vice president, human resources and workforce development.

Mr Koretz is the president and CEO of BlueTie, a provider of web-based applications and monetization platforms for businesses, software developers, and service providers worldwide. Mr Koretz serves as a member of the board of directors of several privately-held companies.

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EarthLink Schedules July 29 Earnings Call - Zibb.com

July 8, 2008 (FinancialWire) EarthLink (NASDAQ: ELNK) (Current Market Cap: US$899.83 Mil.) will host a conference call on July 29 at 8: 30 a.m. ET to discuss its second quarter 2008 financial results. The earnings will be released at 7 a.m. ET that day.

The call will be available via dial-in or webcast from the company's site. A dial-in replay will be available through midnight on August 5. The webcast will be archived on the company's site.

Atlanta-based EarthLink is an internet service provider offering dial-up, high-speed, voice, web hosting and wireless services.

FinancialWire" is a fully independent, proprietary news wire service of Investrend Information (a division of Investrend Communications, Inc.). FinancialWire" news is written by professional journalists, dedicated to pure journalistic standards. FinancialWire" does not receive or accept any compensation from any individual or subject company (or representative thereof) for its news or opinions. All FinancialWire" news is available at http://www.financialwire.net . Please address any inquiries to feedback@financialwire.net .

Free annual reports for companies mentioned in the news are available at http://investrend.ar.wilink.com/?level=279 .

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Companies: Earthlink Inc (ELNK)

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EarthLink to Announce Second Quarter 2008 Earnings - Zibb.com

EarthLink (Nasdaq: ELNK) today announced it will host a conference call on Tuesday, July 29, 2008, at 8:30 a.m. EDT to discuss its second quarter 2008 financial results. The earnings press release will be issued at 7:00 a.m. EDT.

EarthLink's Chairman and Chief Executive Officer, Rolla Huff and Chief Financial Officer, Kevin Dotts will lead the call.

Investors in the U.S. and Canada interested in participating in the conference call may dial (800) 706-0730 and reference the EarthLink call. Other international investors may dial (706) 634-5173 and also reference the EarthLink call. EarthLink recommends dialing into the call approximately 10 minutes prior to the scheduled start time.

Investors also will have the opportunity to listen to a live Webcast of the conference call via the Internet at the following site: http://ir.earthlink.net/index.cfm

A taped replay will be available beginning at 11:30 a.m. EDT on July 29, through midnight on August 5, by dialing (800) 642-1687. International callers should dial (706) 645-9291. The replay confirmation code is 54998017.

The Webcast of this call will be archived on our site at: http://ir.earthlink.net/events.cfm

About EarthLink

"EarthLink. We revolve around you(TM)." As the nation's next generation Internet service provider, Atlanta-based EarthLink has earned an award-winning reputation for outstanding customer service and its suite of online products and services. EarthLink offers what every user should expect from their Internet experience: high-quality connectivity, minimal online intrusions and customizable features. Whether it's dial-up, high-speed, voice, web hosting, wireless or "EarthLink Extras" like home networking or security, EarthLink connects people to the power and possibilities of the Internet. Learn more about EarthLink by calling (800) EARTHLINK or visiting EarthLink's Web site at www.EarthLink.net

SOURCE EarthLink

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Companies: Earthlink Inc (ELNK)

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EarthLink Announces First Quarter Results - Zibb.com

EarthLink, Inc. (Nasdaq: ELNK) today announced financial results for its first quarter ended March 31, 2008. Highlights for the quarter include:

    -- Income from continuing operations of $57.8 million, or $0.52 per share
    -- Net income of $54.4 million, or $0.49 per share
    -- Adjusted EBITDA (a non-GAAP measure) of $82.1 million
    -- Free cash flow (a non-GAAP measure) of $81.7 million
    -- Increased full year adjusted EBITDA (a non-GAAP measure) guidance to
       $245 million - $260 million


"Clearly, we are very pleased with our first quarter results. Our performance in the quarter is a testament to the hard work and dedication of our employees who put our commitments to customers and shareholders above everything else," said Rolla P. Huff, EarthLink's chairman and chief executive officer. "As a result of the stability we are seeing in the churn rates of our tenured customers, as well as our better than expected expense optimization across every part of the company, we are increasing our guidance for full year Adjusted EBITDA, free cash flow and income from continuing operations," continued Huff.

Financial and Operating Results

Revenue

As part of the restructuring analysis that was done during the third quarter of 2007, EarthLink determined that the increase in early life churn profiles of many newly acquired narrowband customers meant that we were no longer generating a positive financial return on our sales and marketing investments. EarthLink significantly reduced these activities, which historically have been primarily to replace customer churn. This change allows the narrowband subscriber base to decline to a more sustainable customer level while generating significantly higher cash returns. As a result of these expected subscriber declines, total company revenues were $263.1 million, an 18.8 percent decrease compared to the first quarter 2007.

Profitability and Other Financial Measures

EarthLink realized $57.8 million, or $0.52 per share, in income from continuing operations in the first quarter of 2008, compared to $(22.4) million, or $(0.18) per share, in the first quarter of 2007. The significant improvement was primarily the result of a decrease in expense related to acquiring and supporting new customers that, because of early life churn, were no longer providing a positive shareholder return. Additionally, EarthLink realized a reduction in equity method losses compared to the first quarter of 2007, which were partially offset by an increase in the company's income tax provision in the first quarter of 2008.

EarthLink generated Adjusted EBITDA (a non-GAAP measure, see definition in "Non-GAAP Measures" below) of $82.1 million for the first quarter of 2008, compared to $23.6 million in the first quarter of 2007. This increase was the result of the significant improvement in income from continuing operations noted above.

Net income was $54.4 million, or $0.49 per share, for the first quarter of 2008, compared to a net loss of $(30.0) million, or $(0.24) per share, for the first quarter of 2007. Our first quarter 2008 results include a loss of ($3.4) million from our discontinued operations for the municipal Wi-Fi assets, compared to a loss of $(7.6) million during the first quarter of 2007.

Subsequent to the end of the first quarter of 2008, EarthLink reached agreements with the cities of Corpus Christi, TX and Milpitas, CA to transfer ownership of our municipal Wi-Fi assets to those respective cities. Additionally, EarthLink will terminate municipal Wi-Fi service in New Orleans, LA and remove its network from the market.

Balance Sheet and Cash Flow

Free cash flow (a non-GAAP measure, see definition in "Non-GAAP Measures" below) was $81.7 million during the first quarter of 2008 compared to $8.0 million during the first quarter of 2007. The improvement was the result of the significant increase in Adjusted EBITDA in the first quarter 2008, coupled with a $15.2 million decrease in capital expenditures and subscriber base acquisitions in the quarter compared to the first quarter of 2007.

The company repurchased 1.3 million shares of its outstanding common stock for $9.1 million in the first quarter of 2008 and had $191.9 million remaining under its share repurchase program as of the end of the quarter.

EarthLink ended the first quarter with $320.0 million in cash and marketable securities, an increase of $31.4 million from December 31, 2007. Additionally, in April 2008, as a result of Platinum Equity's acquisition of Covad, EarthLink received $50.8 million in complete repayment of our debt investment in Covad. The Company will receive an additional $6.3 million in May 2008 in payment of our equity investment in Covad.

Non-GAAP Measures

Adjusted EBITDA is defined as income (loss) from continuing operations before interest income and other, net, income taxes, depreciation and amortization, stock-based compensation expense under SFAS No. 123( R ), net losses of equity affiliate, gain (loss) on investments in other companies, net, and facility exit, restructuring and other costs.

Free cash flow is defined as income from continuing operations before interest income and other, net, income taxes, facility exit, restructuring and other costs, stock-based compensation expense under SFAS No. 123( R ), net losses of equity affiliate, gain (loss) on investments in other companies, net, and depreciation and amortization, less cash used for purchases of property and equipment and purchases of subscriber bases.

Adjusted EBITDA and free cash flow are non-GAAP financial performance measures. They should not be considered in isolation or as an alternative to measures determined in accordance with U.S. generally accepted accounting principles. Please refer to the Consolidated Financial Highlights for a reconciliation of these non-GAAP financial performance measures to the most comparable measures reported in accordance with U.S. generally accepted accounting principles and Footnote 3 of the Consolidated Financial Highlights for a discussion of the presentation, comparability and use of such financial performance measures.

Business Outlook

These statements are forward-looking, and actual results may differ materially. See comments under "Cautionary Information Regarding Forward-Looking Statements" below. EarthLink undertakes no obligation to update these statements.

For the full year 2008, management is increasing its previously issued guidance. Management now expects to generate Adjusted EBITDA of $245 million to $260 million, income from continuing operations of $153 million to $163 million, and free cash flow of $215 million to $235 million.

Conference Call for Analysts and Investors

Investors in the U.S. and Canada interested in participating in the conference call on April 24, 2008 at 8:30 a.m. Eastern Daylight Time (EDT) may dial 1-800-706-0730 and reference the EarthLink call. Other international investors may dial 1-706-634-5173 and also reference the EarthLink call. EarthLink recommends dialing into the call approximately 10 minutes prior to the scheduled start time.

A taped replay will be available beginning at 10:30 a.m. EDT on April 24, 2008 through midnight on May 1, 2008 by dialing 1-800-642-1687. International callers should dial 1-706-645-9291. The replay confirmation code is 41005794.

The Webcast of this call will be archived on EarthLink's site at: http://ir.earthlink.net/events.cfm

About EarthLink

"EarthLink. We revolve around you(TM)." As the nation's next generation Internet service provider, Atlanta-based EarthLink has earned an award-winning reputation for outstanding customer service and its suite of online products and services. EarthLink offers what every user should expect from their Internet experience: high-quality connectivity, minimal online intrusions and customizable features. Whether it's dial-up, high-speed, voice, web hosting, wireless or "EarthLink Extras" like home networking or security, EarthLink connects people to the power and possibilities of the Internet. Learn more about EarthLink by calling (800) EARTHLINK or visiting EarthLink's Web site at www.EarthLink.net .

Cautionary Information Regarding Forward-Looking Statements

This press release includes "forward-looking" statements (rather than historical facts) that are subject to risks and uncertainties that could cause actual results to differ materially from those described. Although we believe that the expectations expressed in these forward-looking statements are reasonable, we cannot promise that our expectations will turn out to be correct. Our actual results could be materially different from and worse than our expectations. We disclaim any obligation to update any forward-looking statements contained herein, except as may be required pursuant to applicable law. With respect to forward-looking statements in this press release, the company seeks the protections afforded by the Private Securities Litigation Reform Act of 1995. These risks include, without limitation, (1) that changes to our business strategy may reduce our revenues and profitability; (2) that the continued decline of our consumer access services revenues could adversely affect our profitability; (3) that prices for certain of our consumer access services have been decreasing, which could adversely affect our revenues and profitability; (4) that we might not realize the benefits we are seeking from the corporate restructuring plan announced in August 2007 and our corporate restructuring plan might have a negative effect on our efforts to maintain our subscribers and our relationships with our business partners; (5) that as a result of our continuing review of our business, we may have to undertake further restructuring plans that would require additional charges including incurring facility exit and restructuring charges; (6) that we face significant competition which could reduce our market share and reduce our profitability; (7) that we may be unsuccessful in making and integrating acquisitions and investments into our business, which could result in operating difficulties, losses and other adverse consequences; (8) that we may not be able to successfully manage the costs associated with delivering our broadband services, which could adversely affect our results of operations; (9) that companies may not provide access to us on a wholesale basis or on reasonable terms or prices, which could cause our operating results to suffer; (10) that if we do not continue to innovate and provide products and services that are useful to subscribers, we may not remain competitive, and our revenues and operating results could suffer; (11) that our commercial and alliance arrangements may be terminated or may not be as beneficial as anticipated, which could adversely affect our ability to retain or increase our subscriber base; (12) that our business may suffer if third parties used for technical and customer support and certain billing services are unable to provide these services, cannot expand to meet our needs or terminate their relationships with us; (13) that service interruptions or impediments could harm our business; (14) that government regulations could adversely affect our business or force us to change our business practices; (15) that we may not be able to protect our proprietary technologies; (16) that we may be accused of infringing upon the intellectual property rights of third parties, which is costly to defend and could limit our ability to use certain technologies in the future; (17) that we could face substantial liabilities if we are unable to successfully defend against legal actions; (18) that our business depends on the continued development of effective business support systems, processes and personnel; (19) that we may be unable to hire and retain sufficient qualified personnel, and the loss of any of our key executive officers could adversely affect us; (20) that our VoIP business exposes us to certain risks that could cause us to lose customers, expose us to significant liability or otherwise harm our business; (21) that we may not be able to sell our municipal Wi-Fi assets and that we may incur additional losses related to these operations; (22) that we may not realize the benefits we sought from our investments in the HELIO joint venture; (23) that the use of our net operating losses and certain other tax attributes could be limited in the future; (24) that our stock price has been volatile historically and may continue to be volatile; (25) that our indebtedness could adversely affect our financial health and limit our ability to react to changes in our industry; (26) that the convertible notes hedge and warrant transactions may affect the value of our common stock; and (27) that provisions of our second restated certificate of incorporation, amended and restated bylaws and other elements of our capital structure could limit our share price and delay a change of management. These risks and uncertainties, as well as other risks and uncertainties that could cause our actual results to differ significantly from management's expectations, are not intended to represent a complete list of all risks and uncertainties inherent in our business, and should be read in conjunction with the more detailed cautionary statements and risk factors included in our Annual Report on Form 10-K for the year ended December 31, 2007.



                               EARTHLINK, INC.
          Unaudited Condensed Consolidated Statements Of Operations
                    (in thousands, except per share data)

                                                  Three Months Ended March 31,
                                                    2007               2008
    Revenues:
      Access and service                          $289,755           $234,849
      Value-added services                          34,392             28,225
        Total revenues                             324,147            263,074

    Operating costs and expenses:
      Service and equipment costs                  109,791             96,792
      Sales incentives                               4,604                759
        Total cost of revenues                     114,395             97,551

      Sales and marketing                           99,269             30,916
      Operations and customer support               60,072             39,224
      General and administrative                    43,261             24,926
      Amortization of intangible assets              3,496              4,013
      Facility exit, restructuring and
       other costs (1)                                 -                1,030
        Total operating costs and expenses         320,493            197,660

    Income from operations                           3,654             65,414
    Net losses of equity affiliate                 (29,346)               -
    Interest income and other, net                   3,503              1,616
        Income (loss) from continuing
         operations before income taxes            (22,189)            67,030
    Income tax provision                              (169)            (9,274)
        Income (loss) from continuing
         operations                                (22,358)            57,756
    Loss from discontinued operations (2)           (7,604)            (3,392)
        Net income (loss)                         $(29,962)           $54,364

    Basic net income (loss) per share
      Continuing operations                         $(0.18)             $0.53
      Discontinued operations                        (0.06)             (0.03)
      Basic net income (loss) per share             $(0.24)             $0.50
      Basic weighted average common
       shares outstanding                          123,058            109,493

    Diluted net income (loss) per share
      Continuing operations                         $(0.18)             $0.52
      Discontinued operations                        (0.06)             (0.03)
      Diluted net income (loss) per share           $(0.24)             $0.49
      Diluted weighted average common
       shares outstanding                          123,058            110,300



                               EARTHLINK, INC.
    Reconciliation of Income (Loss) from Continuing Operations to Adjusted
                                  EBITDA (3)
                                (in thousands)

                                                  Three Months Ended March 31,
                                                     2007              2008

    Income (loss) from continuing
     operations                                    $(22,358)          $57,756
    Provision for income taxes                          169             9,274
    Depreciation and amortization                    12,089            10,482
    Stock-based compensation expense                  7,880             5,152
    Net losses of equity affiliate                   29,346               -
    Interest income and other, net                   (3,503)           (1,616)
    Facility exit, restructuring and
     other costs (1)                                    -               1,030
        Adjusted EBITDA (3)                         $23,623           $82,078

    Depreciation - cost of revenues                  $4,860            $3,436
    Depreciation - other                              3,733             3,033
    Amortization of intangible assets                 3,496             4,013
        Depreciation and amortization               $12,089           $10,482



                               EARTHLINK, INC.
      Reconciliation of Income (Loss) From Continuing Operations to Free
                                Cash Flow (3)
                                (in thousands)

                                                  Three Months Ended March 31,
                                                      2007              2008

    Income (loss) from continuing
     operations                                    $(22,358)          $57,756
    Provision for income taxes                          169             9,274
    Depreciation and amortization                    12,089            10,482
    Stock-based compensation expense                  7,880             5,152
    Net losses of equity affiliate                   29,346               -
    Interest income and other, net                   (3,503)           (1,616)
    Facility exit, restructuring and
     other costs (1)                                    -               1,030
    Purchases of property and equipment             (13,724)             (278)
    Purchases of subscriber bases                    (1,865)             (117)
        Free cash flow (3)                           $8,034           $81,683



                               EARTHLINK, INC.
         Reconciliation of Guidance Provided in Non-GAAP Measures (3)
                                (in millions)

                                                Year
                                               Ending
                                            December 31,
                                                2008

    Income from continuing operations        $153 - $163
    Depreciation                                 27
    Amortization of intangible assets            15
    Stock-based compensation expense             20
    Income tax provision                       20 - 25
    Facility exit, restructuring and
     other costs (1)                             12
    Interest income and other, net               (2)
      Adjusted EBITDA (3)                    $245 - $260

                                                Year
                                               Ending
                                            December 31,
                                                2008

    Income from continuing operations        $153 - $163
    Depreciation                                 27
    Amortization of intangible assets            15
    Stock-based compensation expense             20
    Income tax provision                       20 - 25
    Facility exit, restructuring and
     other costs (1)                             12
    Interest income and other, net               (2)
    Purchases of property and equipment      (25) - (30)
      Free cash flow (3)                     $215 - $235



                               EARTHLINK, INC.
            Supplemental Financial Data and Key Operating Metrics


                                            March 31, December 31,  March 31,
                                              2007        2007        2008
    Balance Sheet Data                               (in thousands)
    Cash and marketable securities          $367,356    $288,595    $320,023
    Long-term debt                           258,750     258,750     258,750
    Stockholders' equity                     432,296     261,473     313,426

    Employee Data
    Number of employees at end of period (4)   2,108         983         922


                                            March 31, December 31,  March 31,
                                              2007        2007        2008
    Subscriber Data (5)
    Consumer services
       Narrowband access subscribers       3,208,000   2,624,000   2,368,000
       Broadband access subscribers (6)    1,847,000   1,059,000   1,026,000
          Total consumer subscribers       5,055,000   3,683,000   3,394,000

    Business services
       Narrowband access subscribers          36,000      27,000      25,000
       Broadband access subscribers           69,000      66,000      65,000
       Web hosting accounts                  109,000     100,000      97,000
          Total business subscribers         214,000     193,000     187,000

    Total subscribers at end of period     5,269,000   3,876,000   3,581,000


                                         Three Months Ended March 31,
                                              2007        2008
    Subscriber Activity
    Subscribers at beginning of period     5,313,000   3,876,000
    Gross organic subscriber additions       668,000     253,000
    Churn                                   (712,000)   (548,000)
    Subscribers at end of period           5,269,000   3,581,000

    Churn Rate (7)                               4.5%        4.9%

    Consumer Data
    Average subscribers (8)                5,085,000   3,538,000
    ARPU (9)                                  $18.13      $20.38
    Churn rate (7)                               4.6%        5.0%

    Business Data
    Average subscribers (8)                  217,000     190,000
    ARPU (9)                                  $73.32      $81.88
    Churn rate (7)                               2.7%        2.7%



                               EARTHLINK, INC.
              Supplemental Schedule of Segment Information (10)
                                (in thousands)

                                                  Three Months Ended March 31,
                                                     2007              2008
    Consumer Services
      Revenues
        Access and service                         $242,800          $188,971
        Value-added services                         33,593            27,373
        Total revenues                              276,393           216,344
      Cost of revenues                               84,353            71,173
      Gross margin                                  192,040           145,171
      Segment operating expenses                    159,333            61,001
      Segment income from operations                $32,707           $84,170

    Business Services
      Revenues
        Access and service                          $46,955           $45,878
        Value-added services                            799               852
        Total revenues                               47,754            46,730
      Cost of revenues                               30,042            26,378
      Gross margin                                   17,712            20,352
      Segment operating expenses                     16,668            14,871
      Segment income from operations                 $1,044            $5,481

    Consolidated
      Revenues
        Access and service                         $289,755          $234,849
        Value-added services                         34,392            28,225
        Total revenues                              324,147           263,074
      Cost of revenues                              114,395            97,551
      Gross margin                                  209,752           165,523
      Direct segment operating expenses             176,001            75,872
      Segment income from operations                 33,751            89,651
      Stock-based compensation expense                7,880             5,152
      Amortization of intangible assets               3,496             4,013
      Facility exit, restructuring and
       other costs (1)                                  -               1,030
      Other operating expenses                       18,721            14,042
      Income from operations                         $3,654           $65,414



                               EARTHLINK, INC.
                Footnotes to Consolidated Financial Highlights

    1.  Facility exit, restructuring and other costs consisted of the
        following for the periods presented:

                                                 Three Months Ended
                                                      March 31,
                                                   2007      2008
                                                   (in thousands)
        Facility exit and restructuring
         costs for the 2007 Plan                    $-      $1,093
        Facility exit and restructuring
         costs for Legacy Plans                      -         (63)
                                                    $-      $1,030

        In August 2007, EarthLink adopted a restructuring plan (the "2007
        Plan") to reduce costs and improve the efficiency of the Company's
        operations. The Plan was the result of a comprehensive review of
        operations within and across the Company's functions and businesses.
        Under the Plan, the Company reduced its workforce by approximately 900
        employees, consolidated its office facilities in Atlanta, Georgia and
        Pasadena, California and closed office facilities in Orlando, Florida;
        Knoxville, Tennessee; Harrisburg, Pennsylvania and San Francisco,
        California. The Plan was primarily implemented during the later half
        of 2007 and is expected to be completed during the first half of 2008.
        As a result of the 2007 Plan, EarthLink recorded $1.1 million of
        facility exit and restructuring costs during the first quarter of
        2008.

    2.  The Company has reflected its municipal wireless broadband results of
        operations as discontinued operations for all periods presented. The
        following is summarized results of operations related to the Company's
        discontinued operations for the periods presented:

                                                 Three Months Ended
                                                      March 31,
                                                  2007        2008
                                                   (in thousands)
        Revenues                                  $259        $737
        Operating costs and expenses            (7,863)     (2,180)
        Impairment charges                           -      (1,949)
        Loss from discontinued operations      $(7,604)    $(3,392)

    3.  Adjusted EBITDA is defined as income (loss) from continuing operations
        before interest income and other, net, income taxes, depreciation and
        amortization, stock-based compensation under SFAS No. 123( R ), net
        losses of equity affiliate, gain (loss) on investments in other
        companies, net, and facility exit, restructuring and other costs.
        Free cash flow is defined as income (loss) from continuing operations
        before interest income and other, net, income taxes, depreciation and
        amortization, stock-based compensation under SFAS No. 123( R ), net
        losses of equity affiliate, gain (loss) on investments in other
        companies, net, and facility exit, restructuring and other costs, less
        cash used for purchases of property and equipment and purchases of
        subscriber bases.

        Adjusted EBITDA and free cash flow are non-GAAP measures and are not
        determined in accordance with U.S. generally accepted accounting
        principles. These financial performance measures are not indicative of
        cash provided or used by operating activities and may differ from
        comparable information provided by other companies, and they should
        not be considered in isolation, as an alternative to, or more
        meaningful than measures of financial performance determined in
        accordance with U.S. generally accepted accounting principles. These
        financial performance measures are commonly used in the industry and
        are presented because EarthLink believes they provide relevant and
        useful information to investors. EarthLink utilizes these financial
        performance measures to assess its ability to meet future capital
        expenditures and working capital requirements, to incur indebtedness
        if necessary, and to fund continued growth. EarthLink also uses these
        financial performance measures to evaluate the performance of its
        business, for budget planning purposes and as factors in its employee
        compensation programs.  Since the elements of these financial
        performance measures are determined using the accrual basis of
        accounting and exclude the effects of certain capital, financing,
        acquisition-related, and facility exit, restructuring and other costs,
        investors should use them to analyze and compare companies on the
        basis of current period operating performance.

    4.  Represents full-time equivalents.

    5.  Subscriber counts do not include nonpaying customers. Customers
        receiving service under promotional programs that include periods of
        free service at inception are not included in subscriber counts until
        they become paying customers.

    6.  Paying customers who subscribe to EarthLink DSL and Home Phone service
        are counted as both a broadband subscriber and a voice subscriber.

    7.  Churn rate is used to measure the rate at which subscribers
        discontinue service on a voluntary or involuntary basis.  Churn rate
        is computed by dividing the average monthly number of subscribers that
        discontinued service during the period by the average subscribers for
        the period.

    8.  Average subscribers for the three month periods is calculated by
        averaging the ending monthly subscribers or accounts for the four
        months preceding and including the end of the quarterly period.

    9.  ARPU represents the average monthly revenue per user (subscriber).
        ARPU is computed by dividing average monthly revenue for the period by
        the average number of subscribers for the period. Average monthly
        revenue used to calculate ARPU includes recurring service revenue as
        well as nonrecurring revenues associated with equipment and other one-
        time charges associated with initiating or discontinuing services.

    10. EarthLink's business segments are strategic business units that are
        managed based upon differences in customers, services and marketing
        channels. EarthLink's Consumer Services segment is a provider of
        integrated communications services and related value-added services to
        individual customers. These services include dial-up Internet access,
        high-speed Internet access and voice service, among others.
        EarthLink's Business Services segment is a provider of integrated
        communications services and related value-added services to businesses
        and communications carriers. These services include managed data
        networks, dedicated Internet access and web hosting, among others.

        EarthLink evaluates performance of its operating segments based on
        segment income from operations. Segment income from operations
        includes revenues from external customers, related cost of revenues
        and operating expenses directly attributable to the segment, which
        include expenses over which segment managers have direct discretionary
        control, such as advertising and marketing programs, customer support
        expenses, site operations expenses, product development expenses,
        certain technology and facilities expenses, billing operation and
        provisions for doubtful accounts. Segment income from operations
        excludes other income and expense items and certain expenses that
        segment managers do not have discretionary control over. Costs
        excluded from segment income from operations include various corporate
        expenses (consisting of certain costs such as corporate management,
        human resources, finance and legal), amortization of intangible
        assets, stock-based compensation expense under SFAS No. 123( R ) and
        facility exit and restructuring costs, as they are not evaluated in
        the measurement of segment performance.


SOURCE EarthLink

http://www.earthlink.net

Read more...

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Companies: Earthlink Inc (ELNK)

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