EarthLink continues IT services transformation in Q3, posts $1.4M net income

Service provider EarthLink (Nasdaq: ELNK) held the line in the third quarter, coming in just above analyst estimates with revenues of $334.8 million--down 1 percent from Q2--and a net income of $1.4 million, or 1 cent per share.

In a period where the former ISP (Internet services provider) is transforming itself into a nationwide IT services provider--offering data center services and VoIP, among other things--EarthLink's results beat Wall Street analyst estimates predicting a loss of 2 cents per share and revenues of only $333.8 million. The news may hearten investors, though how the market will react remains to be seen until New York's exchanges reopen later this week.

"This quarter was one of continued progress as we move closer to our goal of transforming EarthLink into a nationwide IT services business," said EarthLink Chairman and CEO Rolla P. Huff in the earnings statement. "To meet the growing demand for cloud services, today we announced a significant investment in a nationwide data center footprint and fiber network expansion. We also announced plans to reduce debt on our balance sheet to further strengthen our financial position. From both a strategic and financial perspective, we believe EarthLink is positioning itself to capitalize on the significant IT services market opportunity."

The company updated its outlook for the remainder of 2012, predicting adjusted EBITDA of $277 million to $283 million and net income of $3 million to $5 million for the full year.  Through the fourth quarter of 2013, the company expects to post capex of $215 million to $225 million, including the $45 million investment in its data center and fiber network expansion it announced today.

For more:
- see the earnings release
- and the expansion announcement
- Forbes has this story

Special Report:  Wireline telecom earnings in the third quarter

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