Wednesday, April 25, 2007

EarthLink Sees Continued Decline in Consumer Subscribers

During the first quarter of 2007, EarthLink's overall subscribers declined by 42,000 net subscribers compared to the fourth quarter of 2006 primarily due to a decline in consumer access subscribers. This decline in consumer access subscribers was related to a decline in premium narrowband subscribers, partially offset by growth in value, broadband and voice subscribers.

For the quarter, EarthLink's consolidated revenues increased to $324.4 million, or 4.7 percent, compared to the first quarter of 2006. This increase was driven primarily by growth in business services, partially offset by a decline in consumer services.

For the quarter, revenue from the business services segment increased from $18.2 million to $47.8 million primarily due to our acquisition of New Edge Networks in April 2006.

For the quarter, revenue from the consumer services segment decreased to $276.7 million, or 5.1 percent. Contributing to this change was a $21.2 million, or 8.0 percent, decline in our access services driven by declines in mature premium narrowband services, partially offset by growth in our value narrowband and broadband access services.

EarthLink also revised its previously issued guidance for 2007. Based on current results and expectations, EarthLink now expects year ending consolidated subscribers to decline by 200,000 to 250,000, and the company expects to generate approximately $1.3 billion in consolidated revenue. The company is narrowing its previously issued guidance for adjusted EBITDA from core access services of $190.0 million to $200.0 million and $108.0 million to $118.0 million for adjusted EBITDA for the year. EarthLink is also narrowing its consolidated net loss to $(110.0) million to $(140.0) million for the year.

The company is reaffirming its previously issued guidance for Helio. EarthLink expects Helio to end the year with 200,000 to 250,000 subscribers.

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