Shake-Up At EarthLink. What Does That Mean For Muni Wi-Fi, Helio?


Internet service provider EarthLink took its first steps toward restructuring today: the Atlanta-based company just announced that it is cutting 900 jobs, hiring a chief operating officer, and closing some of its regional offices. More details expected tomorrow during a 9am conference call. Two topics worth listening in for: will EarthLink shutter its troubled municipal wi-fi business? And how much patience does new CEO Rolla Huff have left for “virtual” wireless carrier Helio, which has a cool exclusive phone but burns tons of cash?

Huff took the top spot in June and has been singled-minded about focusing the company on generating cash. The problem is that growth is slowing for EarthLink’s old, profitable businesses — selling broadband and dial-up Internet access — while new growth areas like municipal wi-fi and Helio are expensive and risky. Meanwhile EarthLink has to compete with heavyweights like Comcast and Verizon, who sell bundled Internet, TV, and telephone service packages — and unlike EarthLink, they own the pipe that runs into your house.

EarthLink says the cuts will help the company save up to $35 million this year, resulting in 2007 operating earnings of $135 million to $145 million on about $1.2 billion of revenue. But the ISP still expects to report a net loss of $79 to $109 million for the year.