Helio’s Hurtin’ EarthLink
CNET News' Marguerite Reardon reports that EarthLink yesterday reported a loss of $24.8 million in the fourth quarter of 2006, largely due to its stake in Helio. EarthLink said it lost $85 on the venture in 2006.
Still, the company remained optimistic. "EarthLink is pleased with Helio and the niche it's carved out," said EarthLink CFO Kevin Dotts during a conference call. "ARPU (average revenue per user) is well above the industry average, and the brand recognition in the demographic they're targeting is very good."
That demographic, Reardon says, is "young hipsters with a lot of cash to spend on high-end cell phone services," resulting in an extremely high ARPU of about $100. Helio had about 70,000 subscribers as of the end of last year, and the company says it hopes to increase that to 100,000 by mid-2007. Still, the company doesn't expect Helio to generate positive cash flow until 2009.
"For EarthLink, which owns 50 percent of Helio, this will result in an equity charge of $160 million to $180 million," Reardon writes. "In total, EarthLink expects to lose between $110 million and $150 million on flat to slightly higher revenue of $1.3 billion to $1.35 billion for 2007."
More here from Wi-Fi Networking News … more here from Reuters … and EarthLink's press release is here.
cell said:
Feb 09, 07 at 10:24 pmHelio is an entertainment phone. High-end? I don’t think so. There are a lot of high-end phones with strong brand names offered by other major carriers.