Earthlink Quarterly Loss Widens; 2001 Deficit Estimate Is Narrowed
By JULIA ANGWIN
Staff Reporter of THE WALL STREET JOURNAL
EarthLink Inc. said its second-quarter loss widened but its loss for the year would be narrower than previously forecast.
The Internet-access provider's loss was $90.5 million, or 75 cents a share, compared with $59.4 million, or 52 cents a share, a year earlier, due in part to larger noncash acquisition-related expenses. The loss included a $4.1 million write-down of investments.
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The projection of a narrower-than-expected loss for the year drove EarthLink's stock up 16%, or $2.33, to $17.28 in 4 p.m. trading Thursday on the Nasdaq Stock Market.
Excluding depreciation, amortization and noncash merger-related costs, the company said its loss was 27 cents a share, the same as expected by a consensus of analysts surveyed by Thomson Financial/First Call.
Chief Executive Garry Betty reiterated that he expects the company to be profitable in the fourth quarter, using the cash-flow measure of earnings before interest, taxes, depreciation and amortization, or Ebitda. For the full year, he expects the company will post a loss of $105 million to $120 million, narrower than the $110 million to $135 million he had projected last quarter.
"This is the second quarter in a row that we've improved outlook," Mr. Betty said. "We're showing we really do have a viable business going forward."
EarthLink revenue rose 32% to $303.8 million from $230.9 million a year earlier, driven by high growth in sales of high-speed Internet-access connections. As of June 30, the company had 346,000 high-speed customers, a 20% increase from the previous quarter. By comparison, the company added 39,000 dial-up Internet connections, as growth has slowed in that market and EarthLink has focused on attracting high-speed Internet customers.
Mr. Betty said the company expects the number of dial-up customers could fall next quarter as some clients defect because of the recent price increase to $21.95 a month from $19.95 a month. But he still expects the company to reach five million customers by year end, with 500,000 of them coming from high-speed cable, satellite and digital-subscriber-line connections.
One big boost is likely to come in the fall when AOL Time Warner Inc. plans to start offering EarthLink's service on as many as 20 of its cable systems across the country. EarthLink is considered a takeover play because it is the third largest Internet-service provider.
Write to Julia Angwin at julia.angwin@wsj.com |
