Earthlink 2007 Annual Report Download - page 6

facilities in Atlanta, Georgia and Pasadena, California and closed office facilities in Orlando, Florida; Knoxville, Tennessee;
Harrisburg, Pennsylvania and San Francisco, California. The 2007 Plan was primarily implemented during the latter half of 2007
and is expected to be completed during the first half of 2008.
• Discontinued Operations. In November 2007, our Board of Directors authorized management to pursue strategic alternatives for
our municipal wireless broadband operations, including the sale of the assets. Management concluded that our municipal wireless
broadband operations were no longer consistent with our strategic direction. As a result of that decision, we classified the
municipal wireless broadband assets as held for sale and presented the municipal wireless broadband results of operations as
discontinued operations for all periods presented.
•
HELIO.
During 2007, we decided to discontinue further investments in HELIO, our joint venture with SK Telecom Co., Ltd.
("SK Telecom"). We amended and restated the joint venture agreements whereby SK Telecom agreed to make up to
$270.0 million in additional equity contributions to HELIO, while we retain the right to make additional investments in HELIO.
This eliminates any future requirement to invest in HELIO, while allowing us to maintain a meaningful ownership position in
HELIO with potential investment return in the future.
Business Strategy
Our current business focus is the following:
•
Operational Efficiency.
We are focused on improving the cost structure of our business and aligning our cost structure with
trends in our revenue, without impacting the quality of services we provide. In addition to implementing our corporate
restructuring plan which reduced back-office support costs and subscriber acquisition costs, we are focused on delivering our
services more cost effectively, reducing and more efficiently handling the number of calls to contact centers, managing cost
effective outsourcing opportunities and streamlining our internal processes and operations.
• Customer Retention. We are focused on retaining our existing tenured customers. We continue to focus on offering reasonably
priced access with high-quality customer service and technical support. We believe focusing on the customer relationship will
increase loyalty and reduce churn.
• Opportunities for growth. In response to changes in our business, we have significantly reduced our spending for sales and
marketing. However, we are focused on continuing to add customers that generate an acceptable rate of return and increasing the
number of subscribers we add through partnerships and acquisitions from other ISPs. We will evaluate potential strategic
transactions that could complement our business. We are also focused on adding customers organically by growing our services to
business customers through New Edge, our wholly-owned subsidiary. We believe this is a growth market and we will continue to
differentiate ourselves by providing customers with choices for our business services.
The primary challenges we face in executing our business strategy are responding to competition, reducing churn, maintaining profitability
in our access services and purchasing cost-effective wholesale access. The factors we believe are instrumental to the achievement of our goals
and targets, including the factors identified above, may be subject to competitive, regulatory and other events and circumstances that are beyond
our control. Further, we can provide no assurance that we will be successful in achieving any or all of the factors identified above, that the
achievement or existence of such factors will favorably impact profitability, or that other factors will not arise that would adversely affect future
profitability.
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