Earthlink Versus United Online

Every month, my friends at Thomson Financial send me a spread sheet of insider buying and selling, which I use as an early warning system for events that may happen in the near future. So in the August 2004 edition I found two starkly different but still correlated bits of information. Earthlink Director Linwood Lacy purchased 120,000 shares, the first buy here in 2 years. Now to the second bit of information in the insiders report.

United Online, you know the one with those cheesey mall ads, and crappy dial-up. Well insiders sold nearly $4 million worth of stock including chief financial officer Charles Hillard. This is the first insider selling since November 2003, at a price which is near its 52-week low. Stock has plunged nearly 70% over past 12 months. The relative subscriber values of two companies are $298 and Z$198

What does that tell you? Perhaps Earthlink is expecting some better times ahead. The broadband/wireless trend and Earthlink’s willingness to work with every available option is one of the reasons the company is doing well. The company is buying more co-lo space from Level 3, and has signed a new reselling agreement with Sprint. It is even experimenting with WiMAX, Fixed Wireless and Power Line Broadband. With nearly 51% of American Internet users connecting via high speed Internet, looks like Earthlink backed the right horse.


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