The silver in EarthLink’s fourth-quarter dross was that for the first time, the company generated more revenue from broadband services than from narrowband. As far as Wall Street was concerned, though, that didn’t make up for the company posting a $24.8 million quarterly loss, compared to a $29 million profit in the fourth quarter of 2005.
Broadband revenue was up 35 percent from the fourth quarter of 2005 (the increase was driven primarily by EarthLink’s acquisition of New Edge Networks), while narrowband revenue was down. Ad revenue was also up.
Combined revenue was $382 million, up 5 percent from last year.
Helio, EarthLink’s joint venture with SK Telecom, provided a weight on quarterly earnings, but again EarthLink saw a silver lining: Helio revenue is growing rapidly, it had about 70,000 subs at the end of the quarter, and EarthLink expects Helio to exceed 100,000 high ARPU subscribers by May or so.
The company is proceeding with its transformation into a broadband company. “Our Internet voice initiative had its best quarter yet, and we recorded our record 14th consecutive quarter of growth from our advertising and other value-added services. We continued our leadership position in municipal Wi-Fi networks, launching service in New Orleans, La. and Milpitas, Calif. and being selected by the city of Alexandria, Va. to build, own and operate a municipal wireless network,” said Mike Lunsford, EarthLink interim CEO.
EarthLink added 29,000 net broadband customers, despite a one-time reduction of 19,000 subscribers related to a broadband partner’s database reconciliation. EarthLink now has 1.88 million broadband subs. The net growth in broadband customers included 12,000 net voice subscribers, EarthLink’s best quarter for voice subscriber additions. Net narrowband subscribers declined by 29,000 to end the quarter at 3.3 million.