Is EarthLink Inc. in talks with Time Warner Inc. about buying AOL LLC's dial-up unit? On an
earnings conference call, EarthLink CEO Rolla Huff said EarthLink is positioning itself as a consolidator in the Internet dial-up market and might also pursue acquisitions in e-commerce, online-advertising, Internet-based phone services and wireless broadband.
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AOL reportedly is prepping for a sale, and is undergoing a host of cost-cutting moves -- including a sale of its dial-up business -- that could improve its bottom line. In an interview with The Wall Street Journal, Huff would not say if EarthLink was in talks with Time Warner over AOL. "We think it's worth aggressively pursuing," he told the Journal.
This is a 180-degree change in strategy for EarthLink. Last August it announced a restructuring and cut 900 jobs. During the call EarthLink announced that company revenues were $245.6 million, a 21.2% decrease compared to the second-quarter 2007. However, the company's free cash flow increased from $30 million to $78.5 million.
Huff said that the narrow-band industry has reached maturation and consolidation is necessary and that EarthLink is considering alternate business models in adjacent industries. No announcement will come until the end of the year.
Time Warner's AOL is the largest player in the dial-up market, EarthLink is the second, followed by United Online and MSN. - Maria Woehr
