MarketWatch reports that "EarthLink Inc. has been experiencing delays as it builds some of its city Wi-Fi networks, but overall costs remain on-track and the initiative hasn't been materially damaged, Chief Executive Garry Betty said during a conference call with analysts Thursday. The Atlanta company also continues to struggle with delays for its new bundled service of DSL Internet access and online calling. Its Los Angeles and Atlanta services, once expected to be ready in April, are slated for completion this month. However, on a positive note, the ramp up of its Helio cellphone service, offered by its joint venture with Korea's SK Telecom Co., appears to be largely on track...... EarthLink is currently installing Wi-Fi networks Anaheim, Calif., Philadelphia and New Orleans and expects to begin construction in Pasadena, Calif., in the first quarter 2007. But progress has been slower than expected because of operational difficulties, the executive said during the conference call with analysts to discuss quarterly results."
ELN's target market penetration is 0.1% for the DSL-VoIP product.
As expected, the losses are starting to show up. Telephony mag states, "EarthLink’s sky-high ambitions have brought the company’s earnings crashing down to earth, as its Helio wireless investment was largely responsible for a third-quarter loss of $3.2 million... EarthLink executives said the company lost $26.2 million on Helio, a joint venture with SK Telecom of South Korea, and also faced increased marketing expenses for its new broadband, VoIP and municipal Wi-Fi ventures. As a result of those increased expenses, the company said, its adjusted EBITDA was $31.6 million, down 43% from the third quarter of 2005....The company’s revenues were up 4.5% over the previous year."$331M in revenue, but hosting fell 13% and dial-up 17%.
Reuters reported that "The company reported a third-quarter net loss of $3.2 million...Revenue rose 4.5 percent to $331.3 million. The increase was fueled by a nearly 37 percent rise in revenue from high-speed broadband Internet services, which was partially offset by a declining dial-up subscriber base. EarthLink said it added 47,000 broadband subscribers during the quarter, but lost 81,000 dial-up customers."
"The AP reports that the company’s CEO Gary Betty told analysts about EarthLink’s Wi-Fi ventures, “We’ve had every imaginable delay you can think of” from getting city councils to announce deals on time to getting permits and building towers. The delays will not impact cost estimates for the projects, he said. EarthLink expects a loss next quarter as well."
Wifi News also is reporting that "According to filings dating to June 30, EarthLink has over $200m in cash on hand and no debt. They spent nearly $60m repurchasing stock this last quarter, which is often the case when companies believe their stock is historically undervalued."
Milpitas is furthest along as the BizJournal reports: "Its $1 million project is about two-thirds of the way toward installing 400-plus nodes on city lampposts that will provide the necessary signals. "We're going to use Milpitas as a sales tool," says Paul Reinwand, vice president of product strategy and marketing for Earthlink. "This will be our showcase for other cities looking into wireless services." "