EarthLink Announces Third-Quarter Employee Loss
EarthLink will have several hundred fewer jobs to offshore come tomorrow. This afternoon, the struggling Internet service provider announced plans to sack 900 employees–about half its workforce–as part of a broad corporate restructuring that will shutter company offices in San Francisco; Orlando, Fla.; Knoxville, Tenn.; and Harrisburg, Penn. “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,” newly appointed President and CEO Rolla Huff 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.”
“Additional steps” in this case is a euphemism for “more layoffs to come,” as the company will also “substantially reduce its presence” in Atlanta and Pasadena, Calif.
What this all means for EarthLink’s already faltering municipal Wi-Fi effort remains to be seen. As Om Malik notes, its future is, at best, dubious. EarthLink’s “MuniFi experiment hasn’t gone according to plan, even though the company was successful in signing up quite a few cities for MuniFi networks,” Malik writes. “But EarthLink’s San Francisco effort, for example, is mired in a political morass. The Arlington (Va.) and St. Petersburg (Fla.) MuniFi networks are currently on hold. We are being told that Don Berryman, who used to run the MuniFi business, left the company three weeks ago. More importantly, the company is carrying the costs of Helio, an expensive MVNO effort. Helio, after starting out with $440 million in backing from SK Telecom and EarthLink, recently raised another $200 million ($100 million each from the two partners.) Will EarthLink follow through with this (and future) investments, remains to be seen. Helio is estimated have $40 million in operating costs, not an easy pill to swallow considering that the company continues to lose subscribers in its core ISP business. EarthLink is between the rock and a hard place: If it gets rid of those money-losing businesses, then it is left with a business whose growth engine is negative.”