Some of us spend way too much time online, and EarthLink is OK with that. The company provides Internet connections to more than 1 million consumers and about 150,000 businesses in the US. About two-thirds of those are broadband users. It also offers such services as VoIP computer telephony and Web hosting. EarthLink provides broadband access over cable lines through agreements with network operators including Time Warner Cable, Bright House, and Comcast, while DSL and dial-up connections are made possible over phone lines owned by AT&T and Verizon, among others. The company enterprise segment implements and manages private data networks in addition to providing Internet access and Web hosting for businesses.
After four years of decline, EarthLink's revenue more than doubled in 2011 due largely to the company's expanded operations, geographic footprint, and client list resulting from the acquisitions it made in 2010 and 2011. The company's previously shrinking sales were the result of steadily decreasing consumer subscribers (down in 2010 by about 20%). While fewer consumer accounts translated to lower operating costs and expenses in the area of customer care, Earthlink's expenses rose dramatically in 2011, jumping about 260%, as the company took on new operations in a number of states.
The company's recent shopping spree began in 2010 with the purchase of business communications and technology services provider ITC^DeltaCom for $524 million ($199 million in cash and $325 million in debt). The deal added 16,000 miles of fiber optic network in the southeastern US to EarthLink's infrastructure, and gave its burgeoning enterprise services business a boost, particularly in the areas of IP networking and managed network services.
The next year the company bought One Communications for $370 million (including $285 million of debt). One provided fixed-line traditional and digital phone service to more than 100,000 small and midsize businesses in the Northeast, mid-Atlantic, and upper Midwest. One Communications was integrated into EarthLink's newly established business division, EarthLink Business, which also included assets from ITC^DeltaCom.
The company expanded its enterprise unit with the acquisition of Saturn Telecommunications Services (STS Telecom) for $28 million in cash in 2011. The deal increased EarthLink's footprint in Florida and Georgia, where STS Telecom provided voice, data, and Internet services to small and mid-sized business clients.
Addtionally, EarthLink acquired two managed IT services providers, Business Vitals and xDefenders that year. Business Vitals added a data center in South Carolina, while xDefenders came with a data center in New York. The deals boosted EarthLink's operations in the areas of IT security and professional services. The company's acquisition of the cloud-based application services business of Synergy Global Solutions, expanded its IT support services business and added a hosted applications service for the environmental services market.
Prior to the expansion push, Earthlink renegotiated contracts with its network service providers to match its reduced bandwidth needs, and it brought down operational expenses partly by reducing staff, particularly in customer service and technical support roles. The company also cut back on consumer sales and marketing activities as it refocused on customer retention efforts instead of pursuing costly marketing campaigns targeting large numbers of potential consumer subscribers. – less