EarthLink reports record sales..(trading lower at 63-64 after market)..
Loss narrower than expected; 180,000 new subs
By Bambi Francisco, CBS MarketWatch
Last Update: 5:45 PM ET Jul 14, 1999 Internet Daily
Net headlines
PASADENA, Calif. (CBS.MW) -- EarthLink reported a narrower-than-expected loss as sales doubled to a record $78 million and new subscribers grew by 125 percent.
After the close, the Internet service provider reported an operating loss of $6.9 million, which excludes amortization and other charges related to the June 1998 Sprint transaction. On a per share basis, EarthLink posted a loss of 21 cents, beating Street expectations by a penny but wider than the 20 cent loss reported in the same period a year ago.
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7/14/99 4:48:44 PM ET
Quarterly sales growth to record levels and the addition of 180,000 subscribers met Street projections. But analysts weren't disappointed that the ISP didn't blow away the top-line as many Internet companies are expected to do.
"They guided the Street expectations throughout the quarter, which they have a good record of doing," said Jeffrey Saddler, Internet analyst at FAC/Equities, a division of First Albany. "But I'm encouraged that losses came in less than we expected."
Shares of EarthLink (ELNK: news, msgs) reacted little to the news. They were unchanged in after-market trading on Instinet. The stock fell 1 3/8, or 2.1 percent, to 64 in early trading ahead of the report despite the ISP's earlier announcement to offer DSL, or high-speed Internet access, across the country.
The Pasadena, Calif.-based company also said that gross margins remained at a healthy 57 percent.
At a conference call to begin after the release, analysts will likely bombard EarthLink executives about earlier rumors that the company was in talks to be bought by PC giant Gateway in a deal that would broaden both their offerings. News of such a combination surfaced last month and led to a 20 percent rise in EarthLink's stock.
It seemed, at the time, that a combination would help the ISP strengthen its position as the consumer dial-up access business becomes more of a commodity.
"These companies will have to think about ways to make customers more loyal, but you have to pedal real hard to keep up with the competition through value-added services," said William Klein, a datacommunications analyst at Wasserstein Perella.
Analysts will also expect EarthLink executives to shed light on the types of value-added services or marketing initiatives of EarthLink.
Bambi Francisco is Internet editor for CBS MarketWatch.
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