Earthlink 2009 Annual Report Download - page 33

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Table of Contents
strategy; (23) that our stock price may be volatile; (24) that our indebtedness could adversely affect our financial health and limit our ability to
react to changes in our industry; and (25) that provisions of our second restated certificate of incorporation, amended and restated bylaws and
other elements of our capital structure could limit our share price and delay a change of management. These risks and uncertainties are described
in greater detail in Item 1A of Part I, "Risk Factors."
Overview
EarthLink, Inc. is an Internet service provider ("ISP"), providing nationwide Internet access and related value-
added services to individual
and business customers. Our primary service offerings are dial-up and high-speed Internet access services and related value-
added services, such
as ancillary services sold as add-on features to our Internet access services, search and advertising. In addition, through our wholly-
owned
subsidiary, New Edge Networks ("New Edge"), we build and manage IP-based wide area networks for businesses and communications carriers.
We operate two reportable segments, Consumer Services and Business Services. Our Consumer Services segment provides Internet access
and related value-added services to individual customers. These services include dial-up and high-speed Internet access and voice-over-
Internet
Protocol ("VoIP") services, among others. Our Business Services segment provides integrated communications services and related value-
added
services to businesses and communications carriers. These services include managed IP-
based wide area networks, dedicated Internet access and
web hosting, among others.
Business Strategy
Our business strategy is to maximize the cash flows generated by our business by focusing on customer retention, operational efficiency and
opportunities for growth.
• Customer Retention.
We are focused on retaining our customers. We believe focusing on the customer relationship increases
loyalty and reduces churn. We also believe that satisfied customers provide cost benefits, including reduced call center support
costs and reduced bad debt expense. We continue to focus on offering our access services with high-
quality customer service and
technical support.
•
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. We are focused on delivering our services more cost
effectively by reducing and more efficiently handling the number of calls to contact centers, managing cost-
effective outsourcing
opportunities, managing our network costs, implementing workforce reduction initiatives and streamlining our internal processes
and operations.
•
Opportunities for Growth.
In response to changes in our business, we have significantly reduced our sales and marketing
spending during the past two years. However, we continue to seek to add customers that generate an acceptable rate of return and
increase the number of subscribers we add through alliances, partnerships and acquisitions from other ISPs. We continue to
evaluate and consider potential strategic transactions that may complement our business. We are also seeking ways to create more
scale within our New Edge business.
The primary challenges we face in executing our business strategy are managing the rate of decline in our revenues, aligning costs with
trends in our revenue, responding to competition, reducing churn, purchasing cost-effective network services from third-
party
telecommunications service providers and adding customers that generate an acceptable rate of return. The factors we believe are instrumental to
the achievement of our business strategy 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 strategies identified above, that the
achievement or existence of such
29