EarthLink Reports Narrowed Net Loss

EarthLink Inc. said Thursday that its net loss narrowed substantially in the third quarter as a surge in sales of high-speed Internet access offset declining sales of slower dial-up service.

The No. 3 Internet service provider said cost controls also helped pare its net loss to $30.1 million, or 20 cents a share, from a loss of $84.4 million, or 62 cents, a year earlier. Revenue in the three months ended Sept. 30 rose 7% to $340.7 million from $319 million.

EarthLink impressed analysts with its addition of 77,000 broadband subscribers during the quarter for a total of 681,000, up 68% from a year earlier. Broadband revenue, which makes up nearly 20% of the company’s total, rose 48%. Meanwhile, EarthLink lost 100,000 subscribers to its dial-up services as the total narrow-band subscriber base fell 5.2% to 3.98 million.

“The results show that they are managing the business successfully despite the industrywide maturing of the dial-up business,” said Fred Moran, media analyst with Jefferies & Co. Moran doesn’t own stock in the company. Jefferies & Co.’s investment bank does business with EarthLink and makes a market in its stock.

Atlanta-based EarthLink, which employs about 1,700 people in Pasadena, said it’s benefiting from improved customer service as well as the cost cuts.

But the company lowered its guidance for the full year, citing sluggish growth and increased spending on marketing during the fourth quarter. EarthLink said it now expects a loss, excluding certain charges, of 21 cents to 25 cents a share for the year on revenue of $1.35 billion to $1.37 billion. In July, the company forecast a loss of 15 cents to 22 cents a share on revenue of $1.4 billion.

The results were announced before the close of trading. EarthLink shares rose 2 cents to $5.37 in regular Nasdaq trading.