Earthlink Cuts Profits, Thanks Helio

It’s no secret that Earthlink’s spending loads in an attempt to push new services like muni WiFi, VoIP, web 2.0 services, and an MVNO.

The company released earnings for its second quarter and reported a net income of $16.6 million, down from $43.8 million from the year before. Revenues for the quarter came in at $323.10 million, pretty flat from the previous year’s quarter. The company’s net income drop is not an insignificant loss due to the company’s eager spending spree.

Earthlink’s MVNO Helio cost the company about $13.3 million in lost net income. For the third quarter, Earthlink predicted it will come between roughly break even or losing $10 million in net income, with losses of $20 million to $25 million from Helio. For the full year the company predicted between breaking-even and earning $20 million, with Helio losses of $75 million to $85 million. Earthlink is spending liberally on Helio, but if it doesn’t start bringing in customers soon, things could get very ugly. Of course take into account the cost of those Muni Fi buildouts, you get the drift.