EarthLink Slashes 900 Jobs

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Internet service provider EarthLink is eliminating 900 jobs, about half its total work force, and will close four offices in a bid to save between $25 million and $35 million this year.

EarthLink -- whose cable partners include Time Warner Cable, Bright House Networks and Comcast -- said it will close its Orlando, Fla., Knoxville, Tenn., Harrisburg, Pa., and San Francisco offices and “substantially reduce” its presence in Pasadena, Calif., and Atlanta.

"These changes get our cost structure in line, but there is much more to do," EarthLink president and CEO Rolla P. Huff said in a statement. "We expect to announce additional steps as we continue our work over the coming weeks and months."

The Atlanta-based company, which has about 4 million customers, noted that “given current trends in the Internet-access industry, management expects industry-wide gross subscriber additions to decelerate in 2008.”

EarthLink, a pioneer in dial-up Internet access, resells broadband services of Time Warner and Bright House in virtually all those operators’ markets, and in certain Comcast markets.

With the layoffs and office closings, EarthLink expects to incur $60 million to $70 million in costs, including $30 million to $35 million for employee-related costs and $10 million to $15 million for lease-termination costs.

EarthLink lowered its financial expectations for the third quarter and the rest of the year. The company expects $290 million to $300 million in third-quarter revenues, compared with a prior view of $295 million to $300 million, and a loss of $33 million to $43 million for the quarter excluding restructuring charges.

For the full year, EarthLink expects revenues of $1.19 billion to $1.21 billion, versus its previous forecast of $1.23 billion to $1.24 billion, with loss of $79 million to $109 million for 2007.

Also Tuesday, EarthLink announced that its board of directors authorized the purchase of an additional $200 million of its outstanding shares of common stock, which now gives the company $270 million available to purchase common stock.

 In addition, the company said, Joe Wetzel, formerly president and chief operating officer of Mpower Communications, has joined EarthLink as its new COO, effective Aug. 27. EarthLink CEO Huff was previously chairman and CEO of Mpower, a provider of voice and data services now part of TelePacific Communications.

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