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Summary:

[qi:004] Update: Helio has cut a 100 jobs out its total workforce of over 700 employees, in an effort to streamline its operations and refocus its field sales team towards direct sales, a company spokesperson told us this afternoon. The vast majority of these changes came […]

[qi:004] Update: Helio has cut a 100 jobs out its total workforce of over 700 employees, in an effort to streamline its operations and refocus its field sales team towards direct sales, a company spokesperson told us this afternoon. The vast majority of these changes came in field sales. Few changes were made back at Helio headquarters.

The company also plans to increase the company owned kiosks from 30 to 50. Helio spokesperson claims that the company had its best month in July 2007, and is currently on track to do $100 million in revenues. The company plans to keep introducing new devices through 2008. Helio’s “reallocation of resources” (their words not mine) comes close on the heels of a major restructuring at Earthlink.

My original post is after the fold

Helio, the mega-mobile virtual network operator backed by Korean telecom giant SK Telecom (SKM) and EarthLink (ELNK), is rumored to be contemplating job cuts. Our sources indicate that it could happen sometime this week, and there have been some hush-hush meetings today, but it isn’t clear what’s being talked about. It is also not clear at this stage how many jobs are going to be slashed.

EarthLink, of course, just announced 900 job cuts in an effort to reduce costs; I suspect the rumored Helio cuts are a ripple effect of EarthLink’s move. Despite having raised more than $640 million and boasting both cool devices and a reliable service, the MVNO hasn’t been a spectacular success. The company has focused on the top end of the younger, hipper demographic, with the tag line: “Don’t call it a phone.”

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  1. …..which begs the question, which MVNO has been successful??? Helio seems to have a good product but I’ve never met anyone who actually had one much less even heard of the company.

  2. some of the mvnos that are focused on low end of the market have been successful mostly because of cheap plans. but this whole market is riding the coat tails of boost and virgin mobile.

  3. The problem with amp’d wasn’t their business model, but rather the demographic they targeted… which turned out to be notorious for non-payment; urban playas and gangstas, both real and wanna-be. It may not be Politically Correct, but it’s true. Compound this with the company’s refusal to diconnect users despite bills in the range of THOUSANDS of dollars for fear of hurting their “street cred” and alienating their chosen user base, and you get programmers and systems administrators being handed piles of overdue invoices and asked to call customers because customer service can’t handle the sheer load of delinquincies. The customer laughs at them, hangs up, and continues to rack up a bill they have no intention of paying since the company won’t cut them off.

    There’s nothing wrong with the MVNO business model, but it’s been executed as a dot coom boom model rather than a careful exercise in efficiency and profitability that it should have.

    Having worked in the Helio building on Wilshire and experienced the incompetence first hand, I’m surprised they’ve survived THIS long.

  4. I hear Tracfone is also doing pretty well.

  5. Benjamin Kuo’s Blog » Blog Archive » Helio: job cuts? Thursday, August 30, 2007

    [...] Malik is reporting today that Helio is on the brink of some job cuts, after Earthlink said it would cut 900 people (and much more) earlier this week. So far, the track [...]

  6. Earthlink, Helio, Amp’d, etc… demonstrate to those who weren’t “business aware” during the CLEC crash that buying wholesale and selling retail in the telecom space is VERY difficult.

    Om, you say that Boost and Virgin are successful with cheap plans, but neither is profitable. Virgin’s numbers are deteriorating (higher SAC & churn with decreasing margins). They exist because Sprint wants the additional subscriber revenue, without having them be a drag on their metrics (They have had enough problems with the Nextel churn). They are just doing accounting magic.

  7. Jesse Kopelman Thursday, August 30, 2007

    Tom, there are far worse reasons for MVNOs to exist than allowing the big guys to do accounting magic. Telecom pretty much runs on accounting magic and it always comes home to roost eventually, see Lucent, Nortel, Worldcom, and many others. What I like about MVNOs is that in addition to performing a needed service for the network operators they also have the potential to do something good for consumers — drive features and rate plans. Amp’d might have failed and Helio may soon follow, but it is very likely that they put pressure on carriers to improve their own content offerings. Hell the thing that killed ESPN Mobile is that carriers started offering what was tantamount to the same service as a simple bolt-on to any data-enabled plan.

  8. While flawed business plans and unrealistic ambitions will kill any company, MVNO is not a fundamentaly flawed ‘category’. Unique takes like Sonopia [www.sonopia.com] have a good chance to succeed with a better business model vs. Helio which has no seeming business benefit to anybody

  9. Helio lays off about 100 employees, says sales are bullish | Start Tech News Thursday, August 30, 2007

    [...] [Via GigaOM] [...]

  10. Helio lays off about 100 employees, says sales are bullish | Latest Gadget & Tech News Thursday, August 30, 2007

    [...] [Via GigaOM] [...]

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