EarthLink, Inc. (ELNK)

Except for the improved segment reporting and reorganization of certain business there seems to be no shine for Earthlink which has posted losses of $30 million for the first quarter of 2007. Consumer and business services are the segments formed and other changes include certain realignment of revenues reclassification between the access and the value added services. The business is passing through a rough phase as is evident by s subscriber base has declined by 42,000, primarily due to a 35,000 reduction in customer services segment.





Helios, the joint venture with SK Telecom seems to be very promising. The quarter also witnessed the launch of its flagship device “Ocean” that has many “industry first” to its credit and seems very promising. Strategy for WiFi launch seems to gain momentum as new means of connecting to Internet with the least cost. The company has tasted early success making inroads into cities of Houston, Alexandria and purchased an existing municipal WiFi network in Corpus Christi, Texas. Of late focus has been on incremental opportunities in large cities like Chicago and Los Angles.





The company is operating in a very challenging environment facing competition from established players that has resulted in higher churn rates. Moreover it carries a huge proportion of debt in its balance sheet, which is really a cause of concern. As the result of the recent and anticipated loss the company has withheld its share buyback program for other long-term growth investments. Even the outlook of the management seems negative expecting losses and flat revenues for the coming quarter and better to avoid for the time being.