RSSEarthLink Pink Slips Half Of Workforce
By Ed Oswald | Published August 28, 2007, 4:41 PM
In a continuing effort to cut costs, EarthLInk said it would lay off about 900 employees.
In addition, it would buy back about $200 million of its own stock, according to a statement by CEO Rolla Huff on Tuesday. The news was well received by Wall Street, as EarthLink stock closed up seven percent even in the face of a sharply lower market overall.
EarthLink would close offices in Orlando, Fla., Knoville, Tenn., Harrisburg, Penn., and San Francisco. It would also downsize at its two main offices located in Atlanta and Pasadena, Calif.
"These changes get our cost structure in line, but there is much more to do," Huff said. "While we recognize this is a difficult time for those affected individuals, this was a needed action for the company to better align our cost structure with our existing business."
About $25 million to $35 million in savings would be realized in this year alone, and it expects to break even with restructuring costs of $60 million to $70 million within the next six months.
Much of the changes could be attributed to what EarthLink sees next year as slowing growth in its ISP business. The company built a massive customer on dial-up customers, but has struggled to maintain that as most consumers now opt for broadband, where it has a significantly smaller and less competitive footprint.
Also up in the air is the future of Helio. The MVNO has been at the center of EarthLink's financial problems as it has not been able to turn a profit. The company could spend as much as $270 million on the offering, but may end up pulling out.
EarthLink's municipal Wi-Fi initiative is also possibly in trouble: a review is underway to decide the feasibility to move forward there.
Earthlink has screwed up also in losing providing email service to Sprint (Now Embarq) DSL customers. If they were to kept that deal going, they would be continuing to get revenue from Embarq for each email account they serviced.
I have Embarq DSL and until now my email adderess would of been @earthlink.net (I was a loooong time user of earthlink though so my email is actually @mindspring.com! Anyone remember them??) Anyway, because i've had my mindspring.com address for like 10 years I'll now have to pay earthlink so i can keep that email address and still use embarq's dsl.
Score: 0
|how does this impact their PeoplePC office in San Francisco? I worked a deal with PeoplePC where they purchased our dial-up user base. Some of their policies were a little shady but most of the people were nice.
Score: 0
|Nice moved. Lay off half of the workforce, buy back stocks to reward executives for their *hard work* for saving the company.
Score: 0
|I moved into an apt about 4 months ago. I wanted Earthlink DSL. For 3 years, I had Earthlink DSL 1.5mb service at my last place for 3 yrs. I went with ATT because they offered 6mb service. The only reason I switched is speed, not money, not politics. If ATT can give me 6 why can't Earthlink? This is why they can't hold on to those converts.
Score: 0
|Not exagerating or anything here... I've switched from Verizon's 3.0mbps to Earthlink's 8mbps.
For over 1 1/2 month since the switch, I've had NOTHING but connection problems. My actual speed was literally 110kbps (peak). And, it's not even steady! I've went straight to the phone almost every single day talking to Earthlinks' "technicians" in India who COULD not understand what the hell I was trying to tell them. They've sent the same outsourced technician to my house a few times and the problem could not be solved.
I went back to Verizon after that 1 1/2 months of frustration and stress. My connection is smooth ever since.
I'm still battling with Earthlink though because their stupid billing system billed me for the upcoming month that I wasn't going to use the system since I had cancelled it a month prior.
DO NOT GO WITH EARTHLINK, EVER!!!!
Score: 0
|Seems Earthlink is going the way of AOL. I can't say I'm supprised.
Score: 0
|doesn't AOL own Earthlink?
Score: 0
|No. Back in 2000, AOL was required to allow Earthlink onto its network. http://query.nytimes.com...AF932A15752C1A9669C8B63
Score: 0
|if their helio phones would've come unlocked
or with a broader band support (3g or edge)
they wouldn't be struggling right now ... :)
Score: 0
|