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URL:  http://boards.fool.com/earthlinks-heat-20662119.aspx

Subject:  EarthLink's Heat Date:  4/20/2004  4:16 PM
Author:  TMFTwitty Number:  4317 of 4336

http://www.fool.com/News/mft/2004/mft04042015.htm?ref=btp

EarthLink's Heat

By Alyce Lomax
April 20, 2004

EarthLink (Nasdaq: ELNK) shares shot heavenward after it announced its first-quarter results today, at one point rising 21%. Not only is the company still coaxing customers to its broadband fold, it narrowed its losses and gave a sunnier outlook for 2004. In a climate where narrowband and broadband services represent global cooling and warming, respectively, EarthLink is managing to shed its premium dial-up image, whereas rival Time Warner's (NYSE: TWX) America Online is still struggling with subscriber losses.

EarthLink says it now expects to bring in 300,000 to 550,000 new subscribers this year. It predicts net income of $54 million to $80 million, compared with the January forecast of $13 million to $39 million. Revenue is expected to remain about the same, at $1.41 billion to $1.44 billion.

Although EarthLink still offers both premium and value dial-up, it's been positioning itself to benefit from the switch to broadband. EarthLink added 98,000 subscribers this quarter for a total of 5.3 million. Broadband customers are now at 1.2 million, a 30% increase. Narrowband (dial-up) revenues decreased 11%, while broadband gained 26%.

Earlier this week, the Pew Internet & American Life project said broadband has infiltrated 55% of us Netheads, either at home or at work. That study said that broadband use at home has increased 60% over the past year -- a much faster rate than many of us supposed.

Of course, a large part of that surge is due to the aggressive efforts of cable Internet providers, like Comcast (Nasdaq: CMCSA), and DSL providers, like Verizon (NYSE: VZ) and SBC Communications (NYSE: SBC), to woo users to their high-speed services with fees that hovered only slightly above those of premium dial-up packages.

A co-branded broadband deal inked with Sprint (NYSE: FON) could be another growth driver for EarthLink -- like the competitors above, they know the lure of a single, existing bill is a strong one. EarthLink's recent link-ups with telecom companies are a shrewd play to increase its DSL footprint and compete with Internet providers across the board.

Overall, EarthLink's first-quarter loss narrowed to $11.8 million, compared to a loss of $61.9 million in the same quarter last year. While EarthLink's revenues crept