EarthLink's Push Leaves AOL in Low-Cost Vise

Looking ahead, the company isn't forecasting surprising revenue growth. Its full-year 2003 revenue guidance range of $1.44 billion to $1.50 billion is on the low side of the current analyst consensus of $1.50 billion.

But EarthLink made clear promises on the expense side of the ledger. In part because of the layoffs, which stem from the closing of several customer call centers, EarthLink says it will cut customer service expense for all narrowband and broadband customers by a dollar per month per customer over the next year. In addition, narrowband technology costs should drop a dollar per customer per month over the next year, while per-customer monthly technology costs for the broadband customers to whom EarthLink directly retails its service should drop by $3 to $4.

Excluding the estimated $41 million cost of exiting its call centers, EarthLink says it expects to lose $45 million to $65 million for 2003, compared with a $148 million loss for full-year 2002.

The company, which expects to offer low-frills Internet service via the PeoplePC brand for $10 or $11 per month, says it has been able to re-sign more than 40% of the PeoplePC customers whose long-term Internet service contracts have expired.