Cost Cutbacks Power EarthLink


EarthLink's share price surged more than 16% ($1.19), to $8.52, in the days leading to Oct. 21, after the Internet service provider reported strong third-quarter results, including its first profit in five years.

EarthLink reported net income of $3.5 million (2 cents per share) in the quarter, versus a loss of $30.1 million (20 cents) a year ago. Driving net income: work-force cutbacks. EarthLink has cut about 2,200 jobs in the last year. Also, sales and marketing expenses were trimmed.

Revenue rose 2%, to $347.4 million. Cash-flow more than doubled, to $45.5 million from $22.4 million a year ago.

The discount dial-up service PeoplePC Online added 98,000 new customers, up from 78,000 gains in the second quarter. Total narrowband subscribers fell 3.4% from a year ago, to about 3.8 million.

EarthLink's high-speed data service added 112,000 net new subscribers, ending at 935,000.

Overall, EarthLink ended the quarter with about 5 million paying subscribers, up 128,000, or 2.7%, from a year ago.