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Technology Stocks : EarthLink Network ELNK Wraps Your Fish

ELNK 5.630

0.0%

Mar 8 4:00 PM EST

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To: Grainne who wrote (1)	1/27/1997 4:07:00 AM
From: John Grandy	of 220

Christine, First of all realize that EarthLink has been and is buying up a very large number of small local ISPs nationwide. They have deep pockets. After the big move down to $20 per hour most of these small local ISPs were losing money and were looking for a way out. This does not mean that they are not high-quality ISPs. Some of the very highest quality ISPs up here in the SF Bay Area were purchased by EarthLink. The problem with EarthLink is that the ISP business is going to become very very competitive. It will be one of the most competitive businesses on earth. Look at Compuserve's ads on the SuperBowl attempting to damage AOL as much as possible while AOL is down. EarthLink must massively increase its subscriber base to make a profit. They are currently wading in losses and are deeply in debt from all of their buyouts. They face the same situation AOL faces - the must massively ramp up subscribers to take advantages of economies of scale, all the while the price per month will be plummetting due to competition. In other words, they must kill off the competition and be one of the giants that remain when the dust settles. You can read my other posts to understand why I do not think they are capable of pulling this off. No first-rate investment bank would touch their IPO. Realize that as EarthLink grows they must centralize all operations to cut costs. The team at the small ISP that is probably responsible for your good service will be gone soon. I personally have heard differently from a number of people regarding customer service and quality of connection. In fact, if you do a search on the Web for "EarthLink" you will find more than one person who has posted stating EarthLink as an ISP to avoid.

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