ISP continues to struggle for survival...
Earthlink has announced
that they'll be trimming 900 jobs, as well as closing their Orlando, FL; Knoxville, TN; Harrisburg, PA and San Francisco, CA offices. The company expects to see "facility exit and restructuring costs"
of $60 - $70 million due to the plan, but $25-$35 million in savings this year."While we recognize this is a difficult time for those affected individuals, this was a needed action for the company to better align our cost structure with our existing business,"
says new CEO Rola Huff. The company has been quietly offshoring
the majority of their tech support over the last few years.
Earthlink's in a tough spot. They won't be able to share next-gen telco networks, the dial-up business is dying, their partnership with Covad goes only as far as that company's ADSL2+ network does, cost cutting is affecting support quality and their Muni-Fi efforts netted fewer subscribers than expected. And it's going to get worse:
Given current trends in the Internet access industry, management expects industry-wide gross subscriber additions to decelerate in 2008. This will result in fewer gross subscriber additions for EarthLink as it will no longer add new subscribers that do not yield a positive lifetime value for our shareholders. Additionally, as subscriber growth slows, the company expects to realize fewer migrations from narrowband to broadband. This trend should result in longer tenured existing subscribers generating higher life-time cash values.
While Earthlink struggles and the industry slows
, incumbent operators are busy locking existing customers down with contracts
. Huff had better have a magic plan in his hip pocket, or Earthlink is in big trouble.