0

EarthLink cutting work force in half

ATLANTA - Internet service provider EarthLink Inc. said Tuesday that it would cut 900 jobs - or about half its work force - and close four offices in an effort to reduce operating costs. EarthLink shares climbed 7 percent on the news.

The moves come as the company continues struggling to generate revenues as dial-up access customers turn to high-speed alternatives from cable and phone companies.

More cuts could be announced before the year's end, said Rolla P. Huff, the Atlanta-based company's president and chief executive. As part of the plan, EarthLink also said it will repurchase $200 million of its stock.

'While we see this as an important first step in unlocking the underlying value that we believe is in our company, we are only eight weeks into the process of repositioning EarthLink for the future,' he said. 'These changes get our cost structure in line, but there is much more to do.'

Like many other Internet service providers with roots in dial-up access, EarthLink has sought to diversify its revenue base.

EarthLink does resell some high-speed services, but phone companies in particular have been able to offer cut-rate prices, particularly as part of bundles with traditional long-distance and local calling plans.

The company had counted on the right to sell customers access to citywide wireless networks in exchange for helping cities build the networks. But amid questions about customer demand and the technology's performance, EarthLink announced in April that it was reviewing new deployments while evaluating the performance of the current rollouts in four cities.

It also faced questions over disappointing results from its Helio project, a wireless joint venture with SK Telecom of South Korea. The company has already committed to invest $220 million in Helio and has said it could spend another $50 million on the project, which was blamed for quarterly losses.

In July, the company cut its fiscal year 2007 revenue estimate after reporting hefty losses related to the Helio project.

The company said Tuesday it will close offices in Orlando, Fla., Knoxville, Tenn., Harrisburg, Pa., and San Francisco and 'substantially reduce its presence' in Atlanta and Pasadena, Calif.

Shares rose 48 cents to close at $7.34 in Tuesday trading.