EarthLink Earns $49.7 Million

EarthLink Inc. said Thursday that more broadband subscribers and cost-cutting efforts helped it swing to a second-quarter profit from a loss a year before despite a slight decline in sales.

The country’s fourth-largest Internet service provider expects that trend to continue: It raised its full-year earnings forecast even as it trimmed its sales projections. The stock rose nearly 6%.

EarthLink earned $49.7 million, or 31 cents a share, in the second quarter, contrasted with a loss of $15.3 million, or 10 cents, a year earlier. Quarterly revenue slipped to $348.6 million, from $352.3 million.

Like Time Warner Inc.’s America Online, Atlanta-based EarthLink is seeing customers drop its $21.95-a-month dial-up service in favor of faster broadband connections or cheaper dial-up services with fewer features.

EarthLink said it added 47,000 broadband subscribers and signed up 102,000 new customers for its discount PeoplePC service, offsetting a loss of 113,000 premium dial-up customers. Altogether the company added 31,000 subscribers during the quarter for a total customer base of 5.3 million.

The closure last year of several call centers, including one in Pasadena, continued to help EarthLink’s bottom line, as operational costs dropped 20.9% from last year.

EarthLink will have to rely more on those lean operations to stay in the black. Instead of winning as many as 550,000 new subscribers over the course of the year, EarthLink now expects 400,000 at most. It dropped its full-year revenue goal to $1.42 billion from $1.44 billion, below Wall Street’s consensus estimate of $1.43 billion.

Yet EarthLink boosted its profit forecast to between $90 million and $106 million, a sharp rise from its earlier forecast of $54 million to $80 million and higher than analysts had been expecting.

EarthLink shares rose 54 cents to $9.55 on Nasdaq.