Earthlink Sends 50% of Its Workforce Home
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Earthlink announced today that it was laying off 50% of the work force, or about 900 employees. In times where all companies are trying to economize, it seems that some of these economic moves are less than positive, for both parties.
How much can a supplier of services cut back its service people and maintain effective service? Earthlink states that the move is an anticipation of slowed growth in its customer base. It can be argued that this is really a no brainer, as co-location for DSL services is always simply a lesson in how much the telcos can cut prices for service packages to snuff out the competition.
This would be different if companies like Earthlink supplied service to areas not serviced by a telco. The money to strike out in a different direction is formidable, but there are many cases where the benefits would be more than financial. Who would not move to a similarly priced provider that has provided service to areas where no broadband service was previously available? The propaganda value would be beyond calculation.
As someone who has never seen the value-added part of the Earthlink equation, I can’t say I’ll miss the company if it quietly dies. Earthlink has never been a huge portal, like AOL or MSN, so the value is questionable for anyone.
Earthlink built a cult following during the era of dialup, which is, for most, over. It has not made any major progress in the broadband area, and has seen the dialup base erode, as most customers eschew dialup for broadband whenever and wherever possible.
In another cost cutting move, the company plans to buy back $200 million of its own stock, which will reap a small benefit in less shareholder payouts.
The company is trying to put a shine on the bad news, stating the cost cutting now will have positive effects on the services and profitability in the future - but then all companies with receding profits and a disappearing customer base make these kinds of statements.
How many actually recover?
Will Earthlink come back? Will someone in the company introduce new services to lure customers back? The future looks bleak for now.
[tags] Earthlink, ISP, dialup, DSL, cutbacks, AOL, MSN, portal [/tags]
6 Comments
Mike
August 29th, 2007
at 8:15am
Who? ;-)
Warren Dace
August 31st, 2007
at 5:12pm
If my experience with Earthlink DSL means anything, it’s no wonder they’re downsizing.
I signed up for the service and it worked for about a month and a half, then I couldn’t connect. I spent the next month with their tech support ( In India of course ) to no avail. After trying this and that they would lie to me, saying they’d found the trouble and I should be able to re-connect in a few hours. Obviously they wanted to get rid of me - the next time I called I would get someone different. After a while they got serious and sent me a new modem which didn’t solve anything. Then they said it was AT&T’s problem, and had three different tech’s sent out, all of whom said there was no problem on their end. After all that I wanted to just cancel, but they said I would have to pay a $150 early cancellation fee and there was no way that could be waived. In disgust, I said OK cancel and charge me. I sent an account of all this to the BBB in Atlanta, and fortunately for me, when they intervened Earthlink canceled all charges .
the oracle
August 31st, 2007
at 8:38pm
Mike - exactly!
Warren, glad things came out better for you than most. It is sad it had to go that far. I’ve been in sales for much of my life - if you haven’t heard, there is a maxim which states that while a good experience leads to a customer telling 5-7 people of his experience, a bad experience leads to the story being recounted about 75 times. Clearly, it does no good to antagonize the customer.
Thanks for the comments.
Bernie Mesmer
September 6th, 2007
at 10:08am
Sorry about your bad service in Atlanta, but as for my experience with Earthlink I have had nothing but good service and good connections with my Earthlink dialup. Will probably be switching to a high speed connection sometime in the future, but it won’t be because of any problems with the Earthlink dialup.
Krissi D.
September 22nd, 2007
at 1:36am
I’m used Earthlink for years, starting with dial-up. When I switched over to cable, I kept Earthlink besides the only other options were AOL and Roadrunner — both which I consider to be useless. Earthlink’s always given me good service, and I have to say that their spam filter is one of the best in the business — not to mention very user-friendly. If they really close their doors and I’m stuck having to go to Roadrunner, I, for one, will be very sad about it.
the oracle
September 22nd, 2007
at 2:44am
Krissi, time will tell - nothing since the original post on any more layoffs.
Thanks for the comment.