Helio, the cash-burning “virtual” wireless carrier co-owned by EarthLink and SK Telecom, saw losses soar last year — but sales grew faster.
Helio lost $327 million in 2007 on $171 million of revenue — a greater loss than 2006, when the company lost $192 million on $47 million of revenue. Throw in the $42 million it lost in 2005, and you get a lot of red ink: more than $560 million in three years.
Silver lining: Revenue beat the high end of the company’s $140-$170 million guidance, and losses came below the low end of its $340-$360 million guidance. Sales also outpaced losses: While losses increased 70% year-over-year, revenue jumped 264% y/y. The financial stats were included in EarthLink’s (ELNK) annual report to the SEC, filed today.
Can Helio survive? The company is cutting costs and restructuring, which can’t hurt. But Helio is still a niche product, and the company missed its own public growth forecast. It finished the year with 180,000 subscribers — well below the 200,000 to 250,000 Helio said it wanted to attract. If it can’t hit scale, or figure out a path to profitability, majority owner SK Telecom (SKM) might try to unload the company sooner than later.