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RealTime IT News

New Subscribers Push EarthLink to Profit

EarthLink , which battles with telecoms, cable companies and other Internet service providers for customers, said the addition of 248,000 subscribers helped it notch a fourth-quarter profit.

Among the additions, 108,000 were broadband subscribers, boosting its overall high-speed user base to 1.1 million. Dial-up customers dropped by 1.3 percent, as some moved to high-speed offerings of competitors.

In all, the Atlanta ISP finished the year with approximately 5.2 million paying subscribers, up 219,000 users from a year ago.

In a conference call, CEO Garry Betty said new tools, such as anti-spyware and anti-virus software, helped drive demand. Distribution deals and promotions with Radio Shack and Staples also helped.

For the three-month period, EarthLink posted net income of $10.7 million, or 7 cents per share, compared to a loss of $36.9 million, or 24 cents per share, during the same period last year. Revenue crept up to $348.6 million, a 0.2 percent gain.

In the first quarter of 2004, EarthLink expects to add 75,000 to 125,000 subscribers, mostly in broadband and value (a basic service priced around $10 per month) narrowband offerings. These gains will be partially offset by a moderate decline in premium narrowband subscribers.

For 2004, EarthLink forecasts sales to be approximately $1.41 billion to $1.44 billion in 2004.

The company will also continue to contain costs. Earlier this month, it announced it would close four call centers and lay off 1,300 employees. The move will save about $30 million annually.

It will also see lower telecommunications costs for both broadband and narrowband services this year.

Despite the quarterly profit, the sector EarthLink operates in is highly competitive. It trails America Online, the online arm of Time Warner, and MSN, the Internet service of Microsoft, and faces threats from regional telecoms and cable operators.

EarthLink will also eliminate bundled PC and Internet service offers from its PeoplePC unit, which it said had not resulted in meaningful, longterm subscriber growth.

EarthLink will have a better idea of how it fared against its rivals tomorrow after Time Warner reports its fourth-quarter results.