ATLANTA — EarthLink Inc. posted a second-quarter loss in line with Wall Street expectations as revenue surged 32% on the strength of the company’s broadband access service.
The nation’s second-largest Internet service provider on Thursday reported a net loss of $90.5 million, or 75 cents a share, compared with $59.4 million, or 52 cents a share, a year earlier.
The latest quarter included acquisition and merger-related costs. Excluding items, the company posted a loss of $35.1 million, or 27 cents a share, compared with a year-earlier loss of $35.2 million, or 29 cents a share. The loss matched a mean estimate from analysts surveyed by Thomson Financial/First Call.
Revenue, meanwhile, jumped 32% to $303.8 million from $230.9 million.
For the third quarter, the company expects a loss, excluding items, of 17 cents to 20 cents a share on revenue of $315 million to $320 million. Analysts were projecting a loss of 22 cents a share, according to First Call.
EarthLink (ELNK) said third-quarter revenue will benefit from its recent price increase and continued growth in broadband services. But the company cautioned that total subscribers may decline modestly in the third quarter because of an increase in “customer churn” as a result of its recent price increase. However, it said subscriber base should remain in the range of 4.75 million to 4.9 million.
In late June, the company announced it would raise its monthly basic-subscription rate by $2, or 10%, to $21.95. EarthLink raised prices for its digital-subscriber-line service in March.
For the year, EarthLink predicts a loss, excluding items, of $105 million to $120 million, or 80 cents to 95 cents a share, on revenue of $1.2 billion to $1.3 billion. Analysts currently expect a loss of 91 cents a share on revenue of $1.24 billion, according to First Call.
Broadband access revenue, which now comprises 13% of EarthLink’s total revenue, surged to $40.6 million from $10.4 million. Narrowband access revenue rose 24% to $244.1 million from $196.3 million.
The company posted negative earnings before interest, taxes, depreciation and amortization, or Ebitda, of $8.2 million, an improvement from a loss of $32.7 million a year earlier. EarthLink said it is still targeting positive Ebitda results for the last quarter of 2001.
EarthLink ended the second quarter with about 4.9 million paying subscribers, up 1.2 million from last year. Average monthly subscriber churn was 3.9%, the same as the preceding quarter and an improvement from 4.2% a year earlier.
Based on current trends and operating plans in place for the year, EarthLink said it expects to end the year with about five million paying customers, with most of its growth from its broadband product line.
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