EarthLink Says It Expects Annual Loss, Shares Plunge

EarthLink, Inc. on Thursday disappointed investors with a net loss and new guidance that it would end the year in the red.

The stock price closed at $6.09, falling 10.44 percent in heavy trading. Bloomberg reported it was the biggest one-day decline in the stock price in a decade while The Associated Press said the shares plunged to a three-year low.

The second-quarter results weren’t welcome news for investors. EarthLink posted a loss of $1.1 million (or 1 penny per share) on revenues of $338.2 million. Analysts on average had anticipated the communications company would report net income of 3 cents a share on sales of $339 million, Bloomberg reported, citing data it compiled.

EarthLink also changed its guidance for the year, revealing that it anticipates an annual loss of $1 million to $4 million. It previously forecast a profit of between $7 million and $11 million.

The Atlanta-based company further revealed that its president and chief operating officer, Joseph Wetzel, would be leaving the company at the end of the year. EarthLink didn’t name a successor.

Revenues in the second quarter declined 2 percent from the prior quarter and 7 percent from the year-ago period.

EarthLink said business services comprised 76 percent of its revenues, up from 74 percent in the year-ago quarter.

In the consumer services segment where EarthLink has shifted the majority of its sales to broadband services, churn fell to 2.3 percent from 2.5 percent in the prior quarter and 2.6 percent in the year-ago quarter.

"Our business is trending in the right direction towards growth," EarthLink Chief Executive Rolla Huff said.


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