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Technology Stocks : Ascend Communications (ASND) -- Ignore unavailable to you. Want to Upgrade?

To: djane who wrote (43178)	4/9/1998 3:21:00 PM
From: djane	Respond to of 61433

Nice profile of Earthlink (big ASND customer) in 4/27/98 Fortune Could EarthLink Possibly Be the Next America Online? pathfinder.com Cool Company Eryn Brown Romantics like to think that the Internet is a level playing field, but it's the big guys who usually win. So the odds were stacked against Sky Dylan Dayton, a 23-year-old coffeehouse owner, when he created EarthLink Network in 1994 to provide access to the Internet. Somehow, though, EarthLink has become the largest independent Internet service provider, with 500,000 subscribers paying $19.95 a month. The Pasadena company isn't profitable so far, but as America Online has shown, online providers can make money if they have the right focus. Sky's focus? EarthLink's only business is helping customers use the Internet. It doesn't create content or develop software (like Microsoft's stumbling MSN) or own and maintain a network (like AT&T or the local phone companies). Instead, it strives to perfect customer service. Like some rivals, EarthLink distributes signup disks everywhere, bundling its software with Sony Music CDs, how-to books about the Internet, even the Tom Clancy bestseller Politika. Each fledgling EarthLink customer also gets a 48-page introduction to the Internet, a monthly newsletter, and--best of all--free, unlimited access to help lines. "Our customer rep is like a concierge for the Internet," Dayton says. EarthLink users seem to appreciate the human touch. Just 3.7% of them left the service last quarter--very low for this business. Some 25% of EarthLink's newbies are referred by existing customers. Now that he's charming the masses, Dayton is wooing powerful partners. After EarthLink went public last January, he brought in experienced managers and big-name directors like WorldCom vice chairman John Sidgmore. This year he's linking up with Sprint. EarthLink will pick up the telco's 130,000 Internet-access customers and get $24 million in cash and a $100 million line of credit. Sprint gets 30% of the company. Since the deal was announced in February, EarthLink's stock price has soared 46%. The sky seems to be the limit for Sky, who remains EarthLink's public face, guiding spirit, and largest stockholder (his stake is worth some $89 million). He expects EarthLink to overtake MSN, the No. 2 Internet provider, within 12 months. The next step? To grow bigger than America Online, which today has more than 20 times as many subscribers as EarthLink. A "Get out of AOL free" offer, aimed at surfers peeved at AOL's recent $2-a-month rate hike, has already lured some customers. And with Sprint on its side, EarthLink will now be able to market to millions more potential customers. Still, EarthLink as No. 1 seems a long shot--longer even than Sky Dayton's hitting it big in the first place.