EarthLink Network will file an amended statement with the Securities and Exchange Commission on Thursday after reporting a day earlier - incorrectly, the company insists - that it didn't have enough cash on hand to meet expenses through the end of the year. "Our folks made a mistake," EarthLink president Garry Betty told Wired News.
That mistake prompted trading in the company's shares to be suspended Wednesday afternoon. EarthLink's stock was down more than 10 percent when trading resumed Thursday morning.
"It was an unfortunate set of circumstances," Betty said. "We do have enough cash to meet our operating expenses for the rest of the year."
Specifically, the company said in its last quarterly earnings report that it had US$6.2 million in cash on hand as of 30 June, compared with just $1.2 million a year earlier. Betty said EarthLink is now "actively seeking new sources of financing," which will likely include selling off $10 million in additional stock to investors.
The Pasadena, California-based Internet service provider claims some 325,000 subscribers, with local dialup access from more than 800 points nationwide. EarthLink reported a second-quarter loss this year of $7.7 million, compared with a loss of $6.8 million a year before. Revenues for the quarter were almost $19 million, up 180 percent from a year earlier.
EarthLink recently cut a deal to be the exclusive ISP for CNET's new Snap online service "starter kit," meaning that people buying the CNET disk will only be able to access the Net via an EarthLink dialup. EarthLink also announced recent tie-ups with Adobe, Sony Entertainment, and Lucent Technologies.
One of the company's more enterprising schemes is its offer of a "cash bounty" to small ISPs looking to shed dialup customers. EarthLink will pay for every new subscriber it can draw from competitors.
Betty said Wednesday's erroneous SEC filing somehow slipped through the cracks, despite having been examined in advance by EarthLink's accountants. "We can improve our process of getting approvals for information to be part of the public record," he observed, adding that all future public documents will get a thorough going-over before leaving the office.
