10-K Watch: Helio Racks Up Major Losses in 2007, EarthLink Reports; Lower Helio Subscriber Numbers

imageEarthLink on Thursday shed some light on how well Helio — one of the last remaining MVNOs in the U.S. — is doing, and it doesn’t look too bright. EarthLink reported that in 2007 Helio’s revenues were up significantly, but losses were also widening as the amount of cash it has on hand is dwindling.

Some results taken from EarthLink’s annual report filed with the SEC (the full Helio annual report is embedded below, and can be downloaded as PDF here:

— Helio’s net loss widened by 41.3 percent to $326.6 million in 2007 compared to $191.8 million in 2006. In the same period, the operator’s revenues jumped 267 percent to $171 million from $46.6 million in 2006.

— Helio, also owned by SK Telecom (NYSE: SKM), had $45.1 million in cash and cash equivalents at the end of 2007. SK Telecom invested another $20 million this month.

— The company is still negotiating Sky Dayton’s transition from CEO to chairman, but it anticipates owing Dayton about $600,000 in cash expenses throughout 2008. It also extended the amount of time Dayton can exercise stock options which accelerated upon his transition, and is allowing him to purchase up to 1.5 million shares of Helio’s common stock.

— EarthLink’s reporting at the end of Q4 that Helio had slightly more than 180,000 subscribers, representing a 28 percent increase over the prior quarter. In Q4, Helio recorded revenues of $56 million, an increase of 147 percent over the prior year and 8 percent over the prior quarter. This is less than what the company projected at the beginning of 2007, when it bandied about numbers in 200,000 to 250,000 range that it believed it could achieve by the end of 2007.

— Then Helio sold off its Buddy Beacon trademark to uLocate at the start of this year. The amount was not disclosed then, but the filing says that there was no cash involved, only “in exchange for waived service fees and a warrant to purchase stock in a third party”, and the total value of it was deemed to be about $0.5 million.


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