EarthLink (Nasdaq: ELNK) reported a 4Q loss of $24.8 million compared with a year-earlier profit of $29.2 million. The losses stemmed from marketing and operating costs associated with Helio, a wireless joint venture with SK Telecom. Helio released some upbeat numbers yesterday, now it seems in advance of this Earthlink news.
In 2Q07, Helio is expected exceed 100,000 high ARPU subscribers, less than ten months after irs marketing launch.
-- EarthLink is forecasting that Helio will more than triple its revenue in 2007 to between $140 million to $170 million, but that it would incur increased sales and marketing costs to do so.
-- Helio generated $46.6 million in revenue and ended the quarter with 70,000 subs.
-- News.com has some more details: Helio’s total losses were $74 million for the quarter and $191.5 million for the year. But the management team said it sees promise in Helio despite heavy losses. “EarthLink is pleased with Helio and the niche it’s carved out,” Kevin Dotts, CFO for EarthLink, said during the earnings conference call. “ARPU is well above the industry average, and the brand recognition in the demographic they’re targeting is very good.”
-- EarthLink executives said they expect losses to continue at least through 2007 and into 2008, with Helio not generating positive cash flow until 2009. High marketing costs will drive losses to between about $300 million and $360 million for 2007, Dotts said.
-- Dotts said he expects the venture to sign up between 200,000 and 250,000 subscribers by the end of 2007.
-- Dotts said EarthLink could pony up an additional $50 million to $100 million in 2007 to keep the venture going. So far, no official plans have been made to commit more cash, he added.
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