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EarthLink Inc. Reports Operating Results (10-Q)

October 31, 2012 | About:
10qk

10qk

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EarthLink Inc. (ELNK) filed Quarterly Report for the period ended 2012-09-30.

Earthlink, Inc. has a market cap of $683 million; its shares were traded at around $6.34 with a P/E ratio of 19.6 and P/S ratio of 0.5. The dividend yield of Earthlink, Inc. stocks is 3.1%. Earthlink, Inc. had an annual average earning growth of 3.1% over the past 10 years.

Highlight of Business Operations:

Total revenues were $334.8 million, a 6% decrease compared to the three months ended September 30, 2011, consisting

Adjusted EBITDA (a non-GAAP measure, see “Non-GAAP Financial Measures” in this Item 2) was $69.5 million, a decrease from $90.5 million during the three months ended September 30, 2011 due to the decrease in total revenues and an increase is costs to expand our Business Services, offset by cost synergies from integrating acquisitions

Our monthly consumer subscriber churn rates decreased from 2.7% during the three and nine months ended September 30, 2011 to 2.5% during the three and nine months ended September 30, 2012, which moderated the decline in average consumer subscribers. Churn rates decreased compared to the prior year periods due to the increased tenure of our subscriber base. We expect our consumer access and service subscriber base and revenues to continue to decrease due to limited sales and marketing activities, competitive pressures, declines in gross broadband subscriber additions and the continued maturation of the market for narrowband

The increase in selling, general and administrative expenses during the nine months ended September 30, 2012 compared to the prior year period was primarily due to the inclusion of full period of selling, general and administrative expenses during 2012 from our acquired businesses, including One Communications and STS Telecom, compared to a partial period during 2011. On a pro forma basis for the acquisition of One Communications, selling, general and administrative expenses decreased $14.0 million, from $340.5 million during the nine months ended September 30, 2011 to $326.5 million during the nine months ended September 30, 2012. The decrease was due to cost savings realized from workforce reductions and other synergies from integrating our businesses, continued cost reduction initiatives, certain benefits as our overall consumer subscriber base has decreased and reduced discretionary sales and marketing spend. The decrease consisted primarily of decreases in personnel-related costs, stock-based compensation expense and occupancy expense, offset by an increase in professional fees.

The decrease in cash flows from investing activities during the nine months ended September 30, 2012 compared to the prior year period was primarily due to a change in cash associated with investments in marketable securities. During the nine months ended September 30, 2011, we received cash of $319.7 million for sales and maturities of investments in marketable securities as we converted our investments to cash equivalents during the period. During the nine months ended September 30, 2012, we used cash of $18.8 million for purchases of marketable securities, net of sales and maturities. Also contributing to the decrease was a $9.8 million increase in capital expenditures, primarily due to the inclusion of capital expenditures of our acquired companies, network and technology center related projects and customer acquisition costs. We continue to focus on investments in our technology infrastructure to support our long-term strategic plans. The overall decrease in cash flows from investing activities was offset by a $40.1 million decrease in cash used for acquisitions, net of cash acquired.

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10qk
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