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EarthLink Expects 4.5 Million Subscribers

EarthLink Inc. announced Wednesday it is on track to grow to 4.5 million subscribers by the end of the year.

If EarthLink (ELNK) attains its year-end goal it will produce about $1 billion in revenue and secure its rank as the second largest ISP in the U.S.

Garry Betty, EarthLink chief executive officer, said the company's strategy to attract narrowband users to its online services is working well to fuel its broadband service expansion.

"We continue to successfully execute on our strategy of attracting and retaining narrowband users and upgrading these customers to more advanced Internet services," Betty said. "In the first quarter, we added 340,000 net new members from our marketing efforts, which is the best quarter of organic growth in the company's history."

As of March EarthLink had approximately 3.5 million subscribers, representing a 54 percent increase in its member base from 2.3 million members a year ago and an 11 percent increase over its member base of 3.1 million members as of year-end 1999.

EarthLink customer counts include its completed merger with MindSpring Enterprises, Inc., which brought almost 1.3 million customers onboard.

Of EarthLink's 3.5 million members approximately 45,000 subscribers access the Internet through its broadband services. The tally represents an 80 percent increase over the fourth quarter of 1999 results.

EarthLink reported first quarter revenues of more than $219 million, or $90 million more than its 1999 first quarter results. Its net loss for the quarter before acquisition expenses and one-time expenses related to the merger of EarthLink Network and MindSpring was $50.9 million.

Narrowband revenues represent $185 million in EarthLink's first quarter earnings while broadband services accounted for list less than $1 million.

EarthLink's broadband services now cover 21 major metropolitan areas, and are expected to reach 40 areas by the end of the summer.

Betty said he was pleased with the solid growth EarthLink saw in the first quarter.

"Our growth in our core business combined with our higher-end services demonstrates EarthLink's success in capturing, satisfying and upgrading our narrowband members," Betty said.

Betty added that EarthLink's alliance with Sprint Cop. (FON) to provide wireless online services would continue to build upon its subscriber-side growth.

"We are thrilled to be an early mover in the wireless Internet market through our long standing relationship with Sprint," Betty said. "This new service provides our users with enhanced functionality of our already existing EarthLink service offerings, and deepens our relationship with our customers as they can now access EarthLink's quality information anywhere they go."

EarthLink also reported that it provides hosting services for more than 121,000 Web sites marking a 78 percent increase over last year's 68,000 clients. Web hosting revenues account for $16.3 million or seven percent of total revenues for the quarter.

The national ISP earned $9 million in content, commerce and advertising revenues for the first quarter, but is on track to realize approximately $50 million in the same category this year.