Monday, Internet service provider EarthLink, Inc. (ELNK) reported a sharp decline in profit for the third quarter from the year-ago period on lower revenue and lower subscriber base. Profit for the quarter were, however, higher than Street expectations. Looking ahead, the company also raised its 2009 guidance.
EarthLink's profit for the third quarter declined to $29.86 million from $51.89 million in the year-ago period. On a per share basis, net income decreased to $0.28 from $0.47 in the prior-year period.
Analysts polled by Thomson Reuters expected earnings of $0.25 for the quarter. Analysts' estimates typically exclude one-time items.
Results for the quarter include a $9.0 million increase in income tax provision and a $4.3 million decrease in gain on investments, net.
The company posted adjusted earnings before interest, taxes, depreciation and amortization or EBITDA of $60.9 million, compared to $74.0 million in the year-earlier quarter.
EarthLink's third quarter revenue plunged 24% to $174.52 million from $230.83 million in the year-ago period due to a decrease in its subscriber base, compared to analysts' expectations of $174.42 million. Net subscriber losses for the quarter was 146,000, 4.2% less than 275,000 in the year-ago quarter.
In line with its cost-cutting measures, the company said its total sales and marketing, operations, customer support, and general and administrative expenses were down 32% to $53.9 million.
EarthLink raised its full-year guidance citing ongoing cost-cutting measures and productivity gains. The company now expects expects to generate income from continuing operations of $110 million to $115 million for the full year.
Aadjusted earnings before interest, taxes, depreciation and amortization or EBITDA is now expected in the range of $243 million - $248 million with free cash flow of $225 million to $235 million.
This October, EarthLink announced a quarterly cash dividend of $0.14 per share on its common stock, payable on December 23, 2009 to shareholders on record from December 9, 2009.
ELNK closed Tuesday's regular trading session at $8.67, up $0.02, on the Nasdaq.
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