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EarthLink Weighed Down By MVNO Woes

EarthLink added to the tech crunch when it posted a second-quarter oss of $16.3 million, compared with a $16.6 million profit a year earlier. Revenue fell to $312.2 million from $332.1 million. The loss was attributed to a combination of subscriber churn (to the tune of 1 million customers) after a Web service contract with telecom firm Embarq expired in April, and particularly sustained losses from Helio, the mobile virtual network venture with South Korean telecom giant SK Telecom.

Helio, seen as a stronger MVNO outfit than the dying Amp'd, is worse off than its rival, posting a loss of $83.8 million for the quarter on revenue of $33.2 million. Amp'd, by comparison, has been taken to task by Verizon Communications for a $33 million debt it can't pay, because its 20something customer base won't (or can't) pay. For EarthLink, Helio has been a long-term investment, as the MVNO showed signs of improvement in exceeding the 100,000 subscriber milestone in the second quarter.

Nevertheless, the future doesn't look bright for EarthLink, which expects a 2007 loss of $110 million to $140 million on revenue of $1.23 to $1.24 billion. New CEO Rolla P. Huff said in a statement that the company's strategy moving forward is "centered around implementing a more focused business strategy and sizing our cost structure to fit our current business." Right, but how?

Read the whole story at The Wall Street Journal »

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