Earthlink Fills Out Cloud Portfolio

Earthlink Business launched three more cloud-based IT services today as it rounds out its portfolio.  The company is busy transforming a collection of CLEC and IT services assets into a cloud-based service provider.  They are already a far different company than the historical dial-up company that most probably still associate with the name, but they’re still in a transitional period.

Today’s product expansion includes a Cloud Launch Pad product to help customers take advantage of a VMWare virtual environment and a Cloud Entry Bundle for those who haven’t gone virtual yet but want to start with scalable computing and hosted Exchange and Sharepoint services.  There is now also a Secure Email Bundle for those just looking for that functionality.

Earthlink also reported its first quarter earnings late last week, so here’s a quick table of their relevant data in some context:

$ in millions	Q3/11	Q4/11	Q1/12	2012 (guidance)
– Business	265.7	262.5	260.2
– Consumer	91.5	87.7	84.1
Revenue	357.3	350.2	344.4
COS	161.3	161.1	159.3
SG&A	108.8	110.6	110.1
EBITDA	90.5	81.6	77.6	285-295
EPS	0.07	0.04	0.07	0.06-0.10
Operating Cash Flow	60.0	50.6	45.9	150-180
Capex	30.5	31.0	31.8	115-135

They still continue to churn off revenue, but in business services the trend continued to decelerate.  The company is aiming to return business services revenues to a path of growth by years’ end on the strength of its newer cloud-based portfolio.  EBITDA also fell at a slower rate than in the prior quarter, while EBITDA margins continued to drop as they roll out new services in anticipation of future growth.  Earnings per share were higher than expected, leading the company to raise its full year 2012 guidance range slightly.

If one personified Earthlink at this stage, they might be said to have their motorcycle taken apart in the living room.  When it’s all re-assembled into something new, it could be a sight to behold.  But in the meantime, hand me that carburetor.

If you haven't already, please take our Reader Survey! Just 3 questions to help us better understand who is reading Telecom Ramblings so we can serve you better!

Categories: CLEC · Cloud Computing