New CEO Brings Shareholder Focus to Earthlink by Eric J. Savitz
Summary: Last week Rolla Huff took the reins as CEO of Earthlink (NASDAQ:ELNK). Dial-up internet, the company's cornerstone, still boasts 3.2 million subscribers. Although clearly not a growth vehicle, the unit still generates enormous cash flow, and remains a vital -- if fading -- part of its business. Earthlink's Helio joint venture resells Sprint's 3G service, coupled with its own 'nifty' handsets including the Ocean, recently featured on Technology Review's cover. With less than 100,000 customers, the JV clearly has some growing to do before it's considered a victory; Huff says he's giving them "45 days to hear the whole story." Huff was upbeat on Earthlink's much-maligned municipal WiFi startup: "Anything that bypasses a monopoly network is a good thing on its face," while admitting that it's questionable whether the business can make enough money to keep it alive. Earthlink makes a decent business reselling DSL, and has a VOIP unit. Huff put down $750k to buy 100,000 shares on the day he took over: "I did it," he said, "because I think I am going to make a great return on that money." Barron's Eric Savitz says shares are not expensive. With Huff's aggressive approach, "Earthlink is going to be fixed, and soon." Shareholders should be rewarded in the short-term.
Related Links: Should Earthlink Abandon Muni WiFi And Helio? • Can Earthlink Make Money In Muni Wi-Fi? • Vonage Announces EarthLink Deal; Investors Yawn • EarthLink, An Interesting but Risky Investment
Earnings call transcript: EarthLink Q1 2007