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Summary:

During today’s EarthLink call discussing Q4 and full year results, CEO Rolla Huff said it was a hard decision to stop investing in Helio, wh…

During today’s EarthLink call discussing Q4 and full year results, CEO Rolla Huff said it was a hard decision to stop investing in Helio, which is performing quite strongly: “We made hard decisions around getting our cost structure down. We made a very difficult decision…to not continue making incremental investments in Helio.”

Last year, EarthLink and SKT agreed that SKT would invest up to $270 million in Helio and EarthLink would be no longer have any future financial exposure to Helio results. EarthLink does maintain an ownership position in Helio with potential investment return in the future. For 2007, EarthLink’s share of Helio’s net loss was $111.3 million.

Helio stats: We’ve already had some of these but here are the stats that matter to Earthlink (NSDQ: ELNK), which says that Helio was exceeding many of the typical industry averages:

– Average revenue per user was more than $85 a month compared to an industry average of under $50.
– users average more than 550 text messages a month; instant message penetration is three times the industry average.
– 95 percent of Helio customers access the web through their mobile devices versus an industry average of about 13 percent.
– In December, Helio members uploaded photos from their devices to the web at a rate five times the industry average.
– Helio finished the quarter with just over 180,000 subscribers, representing a 28 percent growth rate over the prior quarter, and Helio recorded revenues of $56 million, an increase of 147 percent over the prior year and 8 percent over the prior quarter.

On Sky Dayton’s move: Huff: “Sky has a history of creating and building strong brands and he

By Tricia Duryee

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  1. All those stats are great but they curiously don't mention how much $$ they are losing. Spin it however you like, Helio is a sinking ship.

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  2. And who are you, JP, to have a knowledge of what Helio's "ship" is doing?

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  3. If you remember amp'd, they would always brag that their average Revenue per user was over $X. This distracted from the fact that their customers were running up huge bills and not paying. No idea if Helio is in the same boat, but they're framing things the same way.

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  4. They most definately are not. Being a multi-carrier representative, I can tell you that if a Helio subscriber does not pay their bill, they cannot access their phone in any way(INCLUDING phone books, previous texts, music, etc..). They most definately are on top of their billing system.

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  5. Anthony, that is partially wrong. When someone doesn't pay their bill and their account is suspended, they can still access all features of the phone aside from internet applications and calling, obviously. Anything else that is local to the phone can still be accessed.

    That said, Helio is doing awesome, they are going to be around for a long time. :)

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  6. And who are you, CO, to think I am wrong?

    Seriously though, you are probably right…the MVNO market is flush with success stories, especially from those carriers whose investors are spewing all the fantastic metrics they have (except of course the bottom line) as they run for the hills.

    Come to think of it , I'm gonna invest heavily in Helio. Based on those great numbers, this is a goldmine! Thanks for turning my thinking around CO. Say hi to the fairies and unicorns in Delusional Land for me!

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  7. according to the earthlink 10-Q, earthlink's share of the helio losses was $111.3m loss through the first 9 months of '07, not the entire year (because of an accounting change, Earthlink won't have to recognize a proportionate share of the helio loss for Q407). Helio generated a net operating loss of ~$241mm through the first nine months of '07 ($125mm loss in Q3), on revenue of $115mm ($52mm in Q3).

    Despite all those mktg $$s, their subscriber base decreased from approx 5.3 million paying subscribers as of September 30, 2006 to approx 4.2 million paying subscribers as of September 30, 2007.

    So JP, the stats are there if you just look beyond the "sound bytes". But CO, you don't have to be an insider to see that the biz model just doesn't work.

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  8. For those that don't know so is Earthlink when it comes to a sinking ship!
    Customers a claiming fraud from earthlink trying to claim customers owe them money they don't owe then sending it to collections. Then we have the selling their product to people whio cannot recieve it due to where they live and earthlink knew it, then ignoring these people when they asked for a refund. Try to call customer service well it's in India and if you can understand them it doesn't matter since because they don't care.

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