EarthLink to lay off 900

Internet service provider EarthLink said Tuesday that it would lay off approximately 900 employees as the company restructures in an attempt to boost its sagging stock price.

EarthLink will lose about half its staff in the restructuring as it shuts down operations in Orlando, Fla.; Knoxville, Tenn.; Harrisburg, Pa., and San Francisco. It will also substantially reduce its presence in Pasadena, Calif., and Atlanta, the company said in a press release Tuesday.

The reductions are expected to cost the company $60 million to $70 million. But it will save EarthLink $25 million to $35 million through the remainder of 2007, the company said.

And these cuts may only be the tip of the iceberg, according to statements made by EarthLink's new CEO, Rolla Huff.

"While we see this as an important first step in unlocking the underlying value that we believe is in our company, we are only eight weeks into the process of repositioning EarthLink for the future," he said in a statement. "These changes get our cost structure in line, but there is much more to do. We expect to announce additional steps as we continue our work over the coming weeks and months."

The shake-up comes as EarthLink struggles to find ways to balance losses in its traditional Internet service provider business with the high cost of building its municipal Wi-Fi and cellular phone businesses.

The company has won several citywide Wi-Fi contracts with cities such as Anaheim, Philadelphia and San Francisco. The way these deals are structured, EarthLink builds and runs the networks in exchange for using city-owned infrastructure like utility poles.

But the Wi-Fi projects haven't gone as smoothly as EarthLink had hoped. For example, EarthLink is still in contract negotiations in San Francisco for its planned citywide Wi-Fi network. And projects in Arlington, Va., and St. Petersburg, Fla., are supposedly on hold.

The GigaOm blog has also reported that Don Berryman, head of EarthLink's Muni Wi-Fi business, left the company three weeks ago. I haven't confirmed Berryman's departure yet, but I will be talking to EarthLink's CEO later Tuesday.

EarthLink is also pouring huge amounts of money into Helio, a cellular joint venture it started with Korean cell phone provider SK Telecom. The mobile virtual network operator, or MVNO, started with $440 million from both partners. But recently, each of the partners agreed to contribute another $50 million to $100 million to the company.

And all of this comes while EarthLink continues to lose subscribers in its traditional dial-up Internet business. At the end of the day, EarthLink has some very hard choices to make as it moves forward. Look for a news analysis later Tuesday on CNET News.com.

[skimike4]

Earthlink is a CNET Advertiser

I think it's important to mention this, just in the interest of full disclosure. Didn't mean to imply anything about the author's intentions.

[darkguardian]

Results From Years of Lousy Tech Support

I had broadband service for over 10 years and at one time went with Earthlink DSL. I had great service until the last two years when I was getting numerous service interruptions (always after 8pm) and terrible tech support that not only didn't help solve my problems but were overly rude and obnoxious. They had me tear apart my layout and put it back together and even had me move my computer so it was next to the phone jack. They said I was "out of luck". I told them it was a software issue related to a recent upgrade and that I was a techician with experience. The tech literially yelled at me and said I had three strikes against me and until I eliminated those strikes they won't help me. The DSL worked all day but stops working after 8PM was the problem and they couldn't fix it. They wash their hands of the problem. This while still charging me $50/month. They don't own the lines but contract with Comcast to make the connections. I went to another DSL provider with the same computer and all my problems were solved. Earthlink is suffering from Karma it dished out years before. Bad customer service will comeback with a vengeance.

[gsmiller88]

True that...

I had dial up with EarthLink for several years and it was the
SLOWEST ISP I have ever in my life had. I don't know what it was
but I was only getting about 1/4 of the speed I should have been
getting. Anyway, their tech support offered NO support whatsoever
and it took two months just to get them to cancel. So, I
"supposedly" owe them a bill for a month in which I didn't even
sign on, but thanks to their AOLesque tactics they'll not be seeing
THAT money!

[tacit]

I can tell them how to boost their revenue...

...stop overcharging and become more competitive with other
ISPs.

I had several Web sites on Earthlink for about nine years. In that
time, as more and more ISPs got into the business, the prices for
Web hosting services at other ISPs dropped, the amount of
bandwidth increased, and the support, hosting options, and
features available improved.

Not at Earthlink. In a day when other ISPs started charging three
or four dollars a month for Web hosting, Earthlink still charged
twenty-five. In a day when other ISPs were including a hundred
gigabytes of bandwidth per month, Earthlink offered two. After
whopping over-bandwidth charges from Earthlink three months
in a row, I finally packed up all my sites and moved, and I have
now abandoned Earthlink entirely. The cost to move all my
domain registrations, set up hosing for all my sites, and move all
my sites away from Earthlink was about equal to one month's
bandwidth overage charges for just one site at Earthlink.

That's the way competition works. Adapt or die. Earthlink is not
adapting. They need to let go of their high prices, paltry
bandwidth allotments, and concept of bandwidth overage
charges as a revenue stream.

[baconstang]

Almost 5 years..

with Earthlink, all except 3 months with their DSL. Twice I've had
problems, but both times I resolved them with excellent Tech
Support, even when it took nearly an hour to track down, they
stayed on the line with me.

[peteraltschuler]

It shouldn't be about the stock price

Wall Street is fickle, but any company that deludes itself into thinking that short term manipulation of operating costs will have a long term effect on investors' decisions and analysis is focused on the wrong things. Support quality has plummeted at Earthlink, ever since they offshored most of the manpower. That's the first thing to fix because it affects customer loyalty, the company's reputation and, ultimately, revenue. Kill off tangential efforts like muni WiFi and figure out how to build out its own delivery network. Continuing reliance on telco provisioning will always keep their pricing high. And, finally, bid farewell to founder Sky Dayton and Helio. The struggling company is getting scant traction and isn't likely to get more as everyone from Apple to Nokia provides innovations on the phones and the major carriers improve the bundling of services. It isn't the costs that are killing Earthlink. It's the stagnation. Without innovation in services and pricing, it's going to go the way of Ampd or Gateway.

[Too Old For IT]

"Shareholder Value" Is Nothing ...

"Shareholder Value" is nothing more than code-speak for "Destroy the middle class in America!!"

What Earthlink needs to do is provide a great product or service, competitively prices, built and serviced by Americans that are making a good middle-class wage.

The stock market will follow.

[cnetrnb]

Earthlink - message for the CEO

I have been an email cust for years - moved from aol way back. $20 max is fine for great service, but not for bad service - yahoo/gmail is free - I do not like the ads in the email environment, and have stayed with earthlink so far, but it is becoming more difficult to justify.

Earhlink needs to do the following;

1. upgrade the email/webmail feature set - there are many things that should be doable by now - moving historical files to new machines and keeping them consolidated in a useful format is too difficult, and memory allocation is not big enough in todays world, et al.
2. fix the call in service asap - most off shore folks dont speak adequate english, and are not experienced enough in the applications, os, networking to quickley solve problems, and are not really motivated it seems - not enough reward....it has to be a no thanks job!! They should all be shareholders via options.
3. focus on the core biz - cancel the expensive pet projects.
4. talk to exisiting custs before they all drift away to the newer wave of isps.
5. do it all wihin 6-12 months.

robert, calif.

[PCTechGuy]

Earthlink - message for the CEO

I wholeheartedly agree with item number 2 written by cnetrnb. It's difficult at best to communicate with the offshore people, and they lie through their teeth telling you that they are going to do something, and it doesn't get done until a second phone call is made insisting that they honor their agreement made in the first phone call.

I also agree with item number 3, that Earthlink needs to focus on its core business. Earthlink is an ISP, not a cellular phone company. They need to drop Helio and quit wasting money.

Another thing Earthlink needs to quit doing is charging customers different prices for the exact same Earthlink DSL service. They'll charge you the highest price they can (much higher than another major ISP) for a particular service until you threaten to move to that other ISP offering the same service at a lower price. I saw on Earthlink's website that DSL 1.5 ranges in price from $29.99 to $39.99, but gave no explanation for the price range. Why should there be a price range? And why should new customers be given a significantly permanent lower price than existing customers? I saw this on their website, also.

Play fair guys - your customers aren't dumb.

[solrosenberg]

Bring back Reed Slatkin

Only he can save Earthlink. Him or maybe Xenu.

[Stop Discriminating]

Discriminating Employers Revealed

Time has its way of working all things out. EarthLink has been disfunctional for some time and although there is much talk about the poor customer service from a consumer stand point, it's notable that EarthLink has been discriminating against its employees in the midst of all of this turmoil. Prior to all of these lay offs, employees have been fired from EarthLink for race, age, gender and retalitory discrimination charges. These lawsuits are filed in the United States District Court.

This is very interesting!! to say the least.

[MaxSt.Louis]

DC area job

If anyone has strong configuration management skills useing clearquest/case. I have a position for you in Menassas Va. Must have the ability to get a DOD clearance if needed.
contact Kelly Brown Max Enterprises. [e-mail]
Details
Software Configuration Manager

Position requires extensive knowledge of Software Configuration Management methodologies and practices. Responsibilities include but are not limited to:

· developing software CM processes and procedures,

· maintaining multiple baselines,

· preparing Version Description Documents,

· performing software builds and installations,

· troubleshooting/resolving build related problems,

· labeling/tagging builds,

· merging and branching,

· migrating/promoting software to operational libraries,

· developing scripts/makefiles in UNIX environments

Position requires knowledge of the incremental software development life cycle, effective oral and written communication skills, expertise/familiarity with ClearCase/ClearQuest, and experience in Perl and/or Shell scripting.

[darkguardian]

To clear, the software upgrade was WinPoet supplied by Earthlink and not any software upgrades from Microsoft etc.