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Microsoft Pri0

Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times technology reporter Matt Day.

April 26, 2007 at 10:59 AM

Helio dragging down EarthLink

Everyone knows that EarthLink had to do something as its dial-up Internet customers slowly slipped away.

And it has. It has started to roll out municipal Wi-Fi networks around the country and resell broadband services. It also launched a cellphone service, called Helio, with the help of SK Telecom of South Korea.

The service primarily targets younger users who like to keep in touch with their friends and use a lot of high-end data services, such as music downloads and e-mail. At CTIA last month, it showed off its fancy new dual-sliding phone called Ocean.

But while all this has been a huge opportunity for EarthLink, it’s also a drag on its earnings. Today, the Atlanta-based company reported first quarter results.

During the quarter, Helio reported a net loss of $63.1 million on revenues of $30.4 million. EarthLink said minus certain amortization-related transactions,

its share of Helio’s loss resulted in an equity loss of $29.3 million in the first quarter.

To be sure, EarthLink said Helio continues to make investments in infrastructure, products and marketing to support future growth. But still, the overall company’s net loss was $30 million, or 24 cents a share (of that Helio contributed almost all — or $29.3 million).

It added that Helio continues to increase its subscriber base and is on track to surpass 100,000 members in the second quarter.

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