EarthLink Still Shrinking, But Profits, Guidance Up (ELNK)

At some point, EarthLink (ELNK) will have to figure out how it’s going to grow its shrinking dialup/broadband Internet access business. But in the meantime, new CEO Rolla Huff’s cost-cutting and fat-trimming are working.

EarthLink reported a $54.4 million Q1 profit this morning, up huge from a $30 million loss during Q1 2007 — despite Q1 sales dropping 19% year-over-year to $234.8 million. Diluted EPS of 49 cents per share handily beat the Street’s 33 cents per share consensus.

And EarthLink raised 2008 guidance: It expects earnings from continuing operations to come in between $153-163 million, up from its previous forecast of $140-155 million.

How’d Huff stop the bleeding? By focusing the company away from cash-burning investments in Helio — a wireless joint venture with SK Telecom (SKM) that’s burned more than half a billion dollars so far, and municipal wi-fi.

In its Q1 release, EarthLink said it had reached agreements with two cities to transfer ownership of their muni wi-fi assets to the city governments, and it will shut down and remove its wi-fi network in New Orleans.

See Also:
EarthLink CEO: Dial-Up Is The Future
Helio: How To Lose Half A Billion Dollars In Three Years

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