EarthLink Cuts 900 Jobs, Boosts Share Buyback
EarthLink said Tuesday it will cut about 900 jobs as part of a restructuring to reduce costs, and its board authorized an additional $200 million share buyback, sending its shares up 10 percent.
The Internet service provider said it plans to take charges of about $60 million to $70 million related to the restructuring, most of which it will recognize in the third and fourth quarters.
EarthLink also lowered its annual revenue forecast to below average Wall Street expectations.
"We expect to announce additional steps as we continue our work over the coming weeks and months," EarthLink President and Chief Executive Rolla Huff said in a statement.
"While we recognize this is a difficult time for those affected individuals, this was a needed action for the company to better align our cost structure with our existing business," he added.
EarthLink said it plans to close offices in Orlando, Florida; Knoxville, Tennessee; San Francisco; and Harrisburg, Pennsylvania. It also will reduce its presence in Pasadena, California, and its home base of Atlanta.
The company cut its annual revenue forecast to a range of $1.19 billion to $1.21 billion, from a previous estimate of $1.23 billion to $1.24 billion. Analysts had been expecting $1.23 billion, according to Reuters Estimates.
EarthLink said it expects a full-year net loss of $79 million to $109 million.
It also forecast third-quarter revenue of $290 million to $300 million, and a net loss of $33 million to $43 million.
Analysts on average are expecting revenue of $297.6 million and a loss of $41.5 million before charges and other items for the third quarter, according to Reuters Estimates.