Rolla Huff, the new chief executive officer at EarthLink, is bringing out the broom at the struggling Internet Service provider.
EarthLink (Nasdaq: ) said Tuesday it is laying off 900 workers – approximately half its workforce – and closing several offices as part of a huge restructuring plan.
The company also said it would buy back $200 million of its stock.
EarthLink offices in Orlando, Fla., Knoxville, Tenn., Harrisburg, Pa., and San Francisco will be closed, the company said. It also will cut workers at offices in Atlanta, where the company is based, and in Pasadena, Calif.
More changes apparently are coming, according to Huff, who joined the company in June. He replaced Gary Betty, who died of cancer in January.
The layoffs and restructuring were to begin immediately and be completed by year’s end. EarthLink will take a $60-million to $70-million charge to cover the restructuring costs.
"While we see this as an important first step in unlocking the underlying value that we believe is in our company, we are only eight weeks into the process of repositioning EarthLink for the future,” said Huff. “These changes get our cost structure in line, but there is much more to do.
"We expect to announce additional steps as we continue our work over the coming weeks and months,” he added.
Huff already pulled EarthLink back from an aggressive commitment to build wireless networks in partnership with municipal governments across the country. The company has been actively involved in high-profile projects in Pasadena and Philadelphia.
EarthLink also committed additional capital in July to its wireless-phone-service partnership called Helio. EarthLink is partnered with South Korea-based SK Telecom in that venture.
Losses from Helio dragged EarthLink into the red in the second quarter. In its earnings report, Earthlink said it lost $16.3 million, or 13 cents a share, on revenues of $312.2 million. Helio expenses contributed $40 million to the losses, EarthLink said.
The restructuring will generate between $25 million and $35 million by the end of the year, EarthLink said.
The company adjusted its third-quarter revenue estimate to between $290 million and $300 million, down from $295 million, with revised annual revenue estimate of up to $1.2 billion. It forecast a lost of between $79 million and $109 million.
In a management move, EarthLink also said Tuesday it had hired Joe Wetzel as its chief operating officer.