Earthlink Fires Half of Employees

Carnage at Earthlink.  And more to come probably.  Earthlink is trying to phase away from its money-losing business of cheap dial-up internet service to focus on a new money-losing business of “myspace mobile phones” and the money-losing business of city-wide wireless networks.

From CNET here:

Internet service provider EarthLink said Tuesday that it would lay off approximately 900 employees as the company restructures in an attempt to boost its sagging stock price.

EarthLink will lose about half its staff in the restructuring as it shuts down operations in Orlando, Fla.; Knoxville, Tenn.; Harrisburg, Pa., and San Francisco. It will also substantially reduce its presence in Pasadena, Calif., and Atlanta, the company said in a press release Tuesday.

The reductions are expected to cost the company $60 million to $70 million. But it will save EarthLink $25 million to $35 million through the remainder of 2007, the company said.

And these cuts may only be the tip of the iceberg, according to statements made by EarthLink’s new CEO, Rolla Huff.

“While we see this as an important first step in unlocking the underlying value that we believe is in our company, we are only eight weeks into the process of repositioning EarthLink for the future,” he said in a statement. “These changes get our cost structure in line, but there is much more to do. We expect to announce additional steps as we continue our work over the coming weeks and months.”

The shake-up comes as EarthLink struggles to find ways to balance losses in its traditional Internet service provider business with the high cost of building its municipal Wi-Fi and cellular phone businesses.

Last I heard, no one likes to use city-wide wi-fi.  And I have no idea how free wireless internet is supposed to generate a profit.