EarthLink CEO confident in dial-up Internet market
EarthLink, Inc. (Nasdaq: ELNK) CEO Rolla Huff said the Internet service provider is confident the dial-up Internet service market will exist for many years. Huff made the comments during a morning conference call.
“We believe that, not unlike the paging industry, there will be a meaningful segment of U.S. households that will have a dial-up Internet service connection for many years to come,” Huff said.
The chief executive noted industry estimates that place dial-up penetration rates at between 6% and 10% of American households in 2014.
“We aren’t ready to make that prediction, but we’re ready to predict that this form of Internet connection isn’t going away overnight,” he said. “While we’re not an organic growth story today, we’re demonstrating that this business can generate substantial free cash flow. Given the markets we’re all looking at today and probably for the foreseeable future, being in the position to generate substantial cash flow with an unleveraged balance sheet doesn’t seem like a bad place to be.”
An analyst asked Huff if EarthLink plans to acquire dial-up customers from AOL. On Wednesday, Time Warner Inc. (NYSE: TWX) CEO Jeff Bewkes announced on a conference call that the media company plans to split AOL into two segments — advertising and dial-up Internet access.
“I know that Time Warner made this comment yesterday. I have no doubt that Time Warner and AOL are both extremely conscious about how their customers are taken care of and that’ll be important to them in the future,” Huff said. “The reality is that [dial-up Internet access] is what we do every single day. I feel very confident that this is the type of business that we would do very well with.”
Although he would not confirm any acquisitions, Huff said he is “very excited about opportunities that are just showing themselves.”
Before the opening, EarthLink posted a fourth-quarter loss of $9.5 million, or $0.08 per share, compared with a loss of $24.8 million, or $0.20 per share, a year earlier.
The Atlanta-based firm’s quarterly revenue decreased 14% to $282 million, from $328 million during the year-ago period. Wall Street analysts, on average, expected revenue of $281 million.
In midday trading, ELNK shares are up 6.75%, or $0.45, at $7.12. Over the last 52 weeks, shares have ranged from $5.90 to $8.36.
