EarthLink sales, earnings, subscribers drop

Internet service provider reports lower second-quarter sales and earnings as subscriber numbers tumble.

Lance Whitney Contributing Writer
Lance Whitney is a freelance technology writer and trainer and a former IT professional. He's written for Time, CNET, PCMag, and several other publications. He's the author of two tech books--one on Windows and another on LinkedIn.
Lance Whitney
2 min read

EarthLink reported on Tuesday lower sales and profits for the second quarter, though its earnings per share passed analysts' expectations.

For the quarter ended June 30, the Internet service provider earned $31.5 million, or 29 cents a share, compared with $50.6 million, or 45 cents a share, in the year-ago quarter.

Sales fell 24 percent to $185.6 million from $245.6 million in the year-ago quarter.

Analysts polled by First Call had forecast earnings of 26 cents a share on revenue of $186.5 million.

At quarter's end, EarthLink had 2.45 million subscribers, compared with 3.3 million at the end of the second quarter last year. That's a 26 percent drop.

EarthLink, however, was upbeat over customer retention. The company said that the number of subscribers lost in the second quarter dropped to 149,000 from 282,000 lost in the second quarter of 2008. Subscriber churn, which measures the number of people who exit the service over a given period, fell to 3.6 percent in the second quarter vs. 4.3 percent in the year-ago quarter.

Cost cuts aided EarthLink's bottom line, with total expenses for the second quarter declining to $54.9 million, down 34 percent from 2008's second quarter. The company has been trying to rein in costs since 2007.

Based on the quarter's results, EarthLink upped its financial forecast for 2009. It's looking at adjusted earnings of $235 million to $245 million for the year. That's up from its previous forecast of $220 million to $230 million.

Additionally, EarthLink declared the launch of a quarterly cash dividend of 14 cents a share on its common stock.

"The consistency of our operating performance over the past eight quarters and our confidence that the company's core business will continue to generate solid cash flow enables us to commence a quarterly dividend program that will return a meaningful amount of cash to shareholders," EarthLink CEO Rolla Huff said in a statement.

EarthLink also announced that Bradley Ferguson will become its chief financial officier, starting Saturday. Ferguson has been the company's controller and previously its vice president of commercial finance. Ferguson has been an EarthLink officer since its merger with MindSpring Enterprises in 2000 and was a MindSpring officer before that. Current CFO Kevin Dotts will leave the company in mid-September.