EarthLink shares plunge after 2Q loss, exec to go

AP News
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Posted: Aug 02, 2012 4:06 PM

ATLANTA (AP) — EarthLink Inc.'s shares plunged to a 3-year low Thursday after the Internet service provider said one of its top executives is leaving, posted a second-quarter loss and a dim outlook for the year.

The company reported a loss of $1.1 million, or 1 cent per share, for the quarter that ended June 30. That's down from net income of $6.5 million, or 6 cents per share, a year ago. The most recent quarter includes an $8.3 million increase in reserves for regulatory audits.

EarthLink's revenue fell 7 percent to $338.2 million.

Analysts polled by FactSet were expecting the company would earn 3 cents per share on revenue of $339.3 million.

EarthLink is dealing with intense competition for consumer and business customers. It faces a dwindling base of dial-up Internet subscribers as more people switch to higher-speed access. It has made several acquisitions to help broaden its business services.

The disappointing quarter infected the company's outlook. For all of 2012, it predicts a loss of $1 million to $4 million. It had previously predicted a profit of $7 million to $11 million, while analysts expected profit of $12.8 million.

EarthLink also said Joseph Wetzel, its president and chief operating officer, is leaving on Dec. 31. The company said his departure comes with the launch of a new operating platform. His responsibilities will be transitioned to a number of remaining executives.

Wetzel, 56, joined the company in 2007.

Shares of the company, which is based in Atlanta, closed down 71 cents, or 10 percent, to $6.09. Shares bottomed at $5.94 earlier, their lowest point since November 2008.