Earthlink Begins Restructuring, But No Word On Plans For 'Money-Losing' Helio Investment

After having absorbed a rough Q2 of revenue and subscriber losses, internet service provider Earthlink (NSDQ: ELNK) is undertaking a corporate restructuring, starting with the elimination of about 900 jobs. Earthlink said it will put its plan into affect immediately and expects to have it completed by the end of the year. Aside from the job cuts, Earthlink will also shutter its offices in Orlando, FL; Knoxville, TN; Harrisburg, PA and San Francisco, while “reducing its presence” in Pasadena, CA, and Atlanta. The restructuring costs should fall within $60 – to $70 million. Additionally, Earthlink has expanded its share repurchase program by $200 million, which increases the current authorization to $270 million. Its financial guidance has also been revised. For Q3, Earthlink anticipates revenue to come in between $290 million to $300 million, and a loss of $33 million to $43 million. For the full year, Earthlink says revenue will be $1.19 billion to $1.21 billion and a net loss of $79 million to $109 million. More details in the release

– Barron’s: While the restructuring wasn’t a surprise, some investors had expected Earthlink to go further in conducting its overhaul. For one thing, Wall St. was expecting Earthlink to cut its ties or sell its investment in the “money-losing” cellular operator Helio. In reporting on Earthlink’s recent earnings results, we noted that Helio, which is half owned by the company and half by SK Telecom, had a strongly negative impact on Earthlink’s numbers. Still, Earthlink has said that today’s announcement is just the beginning and that other changes could be in the offing – including the jettisoning of Helio.