EarthLink profits on cost cuts

After exiting the citywide Wi-Fi business and getting rid of its investment in Helio, EarthLink has managed to boost its quarterly profits to $54.7 million.

Internet service provider EarthLink has turned the corner.

On Tuesday, the company reported profits of $54.7 million, or $0.49 per share, for the third quarter of 2008, compared to a net loss of $79.4 million, or $0.65 per share, during the same quarter a year ago.

The company's revenues were actually down about 22.5 percent, compared to last year. It brought in only $230.8 million, compared to revenue of $298 million in the third quarter of 2007.

EarthLink's financial turnaround comes as a result of massive cost-cutting. The company sold off and shut down two major initiatives this year. First, it exited the citywide Wi-Fi market , leaving cities like Philadelphia with a nearly completed Wi-Fi network, and no one to run or maintain it. A group of investors eventually took over the Philadelphia network .

EarthLink also sold its stake in mobile virtual-network operator Helio. The phone company, which had been a joint venture between EarthLink and Korean cell phone operator Helio, was sold to Virgin Mobile this summer .

EarthLink is now focusing its business on providing broadband and dial-up Internet service. While the dial-up business is dying a slow death, EarthLink's executives still see it as a cash cow. Earlier this year, the company was rumored to be interested in buying AOL's dial-up business to help boost this part of its business.

About the author

Marguerite Reardon has been a CNET News reporter since 2004, covering cell phone services, broadband, citywide Wi-Fi, the Net neutrality debate, as well as the ongoing consolidation of the phone companies. E-mail Maggie.


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