New York - Internet service provider Earthlink announced 900 job cuts and the closure of four offices Tuesday as part of a restructuring effort aimed at aligning costs with sales. The Atlanta-based company currently employs about 1,900 people. Earthlink also said it would also stop costly marketing programmes aimed at attracting new subscribers and would focus instead on maximizing the earnings from its existing customers.
More cuts could be announced before the year's end, said Rolla P. Huff, Earthlink's president and chief executive. As part of the plan, EarthLink also said it will repurchase 200 million dollars of its stock.
The company said the restructuring would cost some 65 million dollars and it lowered its third-quarter guidance, calling for a net loss of about 76 cents a share on sales of between 290 million and 300 million dollars.
"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," said Huff. "These changes get our cost structure in line, but there is much more to do."
Earthlink was a leading provider of dial-up internet access but has struggled to keep growth on track as the internet matures and subscribers switch to broadband.
In efforts to diversify, Earthlink has become one of the leading players in so-called Muni-Fi projects, building tax-supported WiFi networks for cities. But the funding of these programmes has stirred political debate and undercut ongoing expansion plans. Cellphone service Helio, an Earthlink joint venture with Korea's SK Telecom, has also failed to yield profits despite an investment of over 200 million dollars.
