EarthLink is worth far more as an independent company than in the arms of a Gateway or other box guy. Forget $87 per share for now (as painful as that may be), this company over the long haul will give us more. Management is driven to grow net new members and gross margins, which I believe will be key to higher prices down the road. Yes, it IS difficult to watch the stock drift almost on a daily basis, however as more investors realize the organic growth and gross margin superiority (yes, gross margin superiority!) versus its nearest competitor MindSpring, that we all will be rewarded. Remember that EarthLink's management could turn profitable by just turning off the marketing spigot, it's just that right now they prefer to grow like gangbusters for a higher valuation down the road. In my opinion this is the right strategy, and this company could find itself as the #2 provider behind AOL sooner rather than later. That is what keeps Mr. Betty & Co. coming to work every day, not selling out to some box guys. Imagine the valuation on this company when they succeed!
Keep the faith, EarthLink is an excellent investment at current levels. Besides, wouldn't it be better to partner with the box guys, rather than sell out to them? You'll find that you will make more money over the long haul that way. |
