EarthLink announces layoffs

by billso on Tuesday, 28 August 2007

Earth­Link, the pri­mary con­trac­tor for Honolulu’s munic­i­pal WiFi project in Chi­na­town, is lay­ing off more than 900 employ­ees and clos­ing 4 offices, accord­ing to news reports. This is a mas­sive cut that affects almost half of the com­pany and sev­eral busi­ness units.

In one of yesterday’s posts, I dis­cussed some of the changes in the wire­less Inter­net indus­try. EarthLink’s retrench­ment in munic­i­pal WiFi was announced ear­lier this year, when the com­pany said it wouldn’t pur­sue new con­tracts until it had a bet­ter idea of the finan­cial returns on cur­rent projects. Sprint’s recent alliance with Clear­Wire, Google’s con­tin­ued efforts in mobile appli­ca­tions and wire­less access, and the stag­nat­ing econ­omy are other fac­tors that have affected EarthLink’s com­pet­i­tive position.

Helio hath no fury… or mar­ket share

It isn’t the WiFi mar­ket that’s hurt­ing Earth­Link, though. The company’s invest­ment in Helio has not worked out well. I men­tioned Helio on June 17 and April 17. The iPhone and the industry’s var­i­ous responses to that ser­vice have put Helio in a lousy posi­tion for a startup com­pany. Accord­ing to The Reg­is­ter, Ver­i­zon is mov­ing fast with its new offer­ings, with some help from Samsung.

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