EarthLink downsizes; muni president is out

By Esme Vos on August 28, 2007 in WiFi News

The long anticipated changes at EarthLink have arrived. The company is eliminating 900 jobs. One of those is reportedly that of Donald B. Berryman, president of the company’s muni wireless unit.EarthLink announced it is eliminating jobs–one of those, according to a report in the Atlanta Constitution, is that of executive vice president and president of Municipal Networks, held by Donald B. Berryman.

I could get no confirmation on the Constitution’s report from EarthLink. When I tried to reach Berryman on his EarthLink cell number the call was answered by Sprint’s generic answering message. My calls to EarthLink’s corporate communications department cascades through three referrals until I reached a young woman who said she was working with an outside PR agency that was “helping out for the day.” She took my questions and said someone from EarthLink would get back to me. We’ll report what we learn as we learn it.

Meanwhile the corporate announcement released today said EarthLink is eliminating 900 jobs, closing offices in Orlando, Fla., Knoxville, Tn., Harrisburg, Pa., and San Francisco, Ca., and is diminishing its presence in Pasadena, Ca., and in its headquarters’ city, Atlanta, Ga. In the announcement, CEO Rolla Huff called the restructuring an “important first step” in “repositioning EarthLink for the future” and said there are more to come.

It’s probably safe bet that the closing of the San Francisco office signals the long-anticipated end of EarthLink’s interest in that city’s hotly contested deployment. The announcement was clearly written for Wall Street. Until EarthLink begins releasing details, we can only make inferences based on what was stated in it. Take a look at what it said about the company’s future direction (my italics added):

“Given current trends in the Internet access industry, management expects industry-wide gross subscriber additions to decelerate in 2008. This will result in fewer gross subscriber additions for EarthLink as it will no longer add new subscribers that do not yield a positive lifetime value for our shareholders. Additionally, as subscriber growth slows, the company expects to realize fewer migrations from narrowband to broadband. This trend should result in longer tenured existing subscribers generating higher life-time cash values. EarthLink expects that as it reduces its marketing efforts aimed at acquiring new customers who have high early life churn characteristics, our overall churn will come down over time as our longer tenured existing customers become the predominant part of our base. ..”

EarthLink clearly won’t be looking to create new customers unless they’re prepared to commit to doing some long term business with the company. That is consistent with the company’s recent focus on securing anchor tenants in muni deployments.

In addition to the cost savings and the adjustments being made to guidance as a result, Earthlink announced a stock repurchase plan and the appointment of Joe Wetzel as COO, and cited savings in operational costs, exit and restructuring costs, and restated its revenue projections for the third quarter and full year of 2007.

Click here to read the announcement.

Click here to read the Atlanta Constitution’s story.