Web Hosting Provider, EarthLink, Releases First Quarter Financials

Atlanta, Georgia - (Website Hosting Directory) - May 8, 2008 - Web hosting solutions and ISP company, EarthLink has reported record net income and adjusted EBITDA,from continuing operations, with free cash flow.

Financial results for its first quarter ending March 31, 2008 highlights include: -- Income from continuing operations of $57.8 million, or $0.52 per share -- Net income of $54.4 million, or $0.49 per share -- Adjusted EBITDA (a non-GAAP measure) of $82.1 million -- Free cash flow (a non-GAAP measure) of $81.7 million -- Increased full year adjusted EBITDA (a non-GAAP measure) guidance to $245 million - $260 million.

Rolla P. Huff, Chairman and Chief Executive Officer of EarthLink noted, ''Clearly, we are very pleased with our first quarter results. Our performance in the quarter is a testament to the hard work and dedication of our employees who put our commitments to customers and shareholders above everything else. As a result of the stability we are seeing in the churn rates of our tenured customers, as well as our better than expected expense optimization across every part of the company, we are increasing our guidance for full year Adjusted EBITDA, free cash flow and income from continuing operations.''

As part of the restructuring analysis that was done during the third quarter of 2007, EarthLink determined that the increase in early life churn profiles of many newly acquired narrowband customers meant that we were no longer generating a positive financial return on our sales and marketing investments. EarthLink significantly reduced these activities, which historically have been primarily to replace customer churn. This change allows the narrowband subscriber base to decline to a more sustainable customer level while generating significantly higher cash returns. As a result of these expected subscriber declines, total company revenues were $263.1 million, an 18.8 percent decrease compared to the first quarter 2007.

EarthLink realized $57.8 million, or $0.52 per share, in income from continuing operations in the first quarter of 2008, compared to $(22.4) million, or $(0.18) per share, in the first quarter of 2007. The significant improvement was primarily the result of a decrease in expense related to acquiring and supporting new customers that, because of early life churn, were no longer providing a positive shareholder return. Additionally, EarthLink realized a reduction in equity method losses compared to the first quarter of 2007, which were partially offset by an increase in the company's income tax provision in the first quarter of 2008.

EarthLink generated Adjusted EBITDA of $82.1 million for the first quarter of 2008, compared to $23.6 million in the first quarter of 2007. This increase was the result of the significant improvement in income from continuing operations noted above.

Net income was $54.4 million, or $0.49 per share, for the first quarter of 2008, compared to a net loss of $(30.0) million, or $(0.24) per share, for the first quarter of 2007. Our first quarter 2008 results include a loss of ($3.4) million from our discontinued operations for the municipal Wi-Fi assets, compared to a loss of $(7.6) million during the first quarter of 2007.

Subsequent to the end of the first quarter of 2008, EarthLink reached agreements with the cities of Corpus Christi, TX and Milpitas, CA to transfer ownership of our municipal Wi-Fi assets to those respective cities. Additionally, EarthLink will terminate municipal Wi-Fi service in New Orleans, LA and remove its network from the market.

Free cash flow was $81.7 million during the first quarter of 2008 compared to $8.0 million during the first quarter of 2007. The improvement was the result of the significant increase in Adjusted EBITDA in the first quarter 2008, coupled with a $15.2 million decrease in capital expenditures and subscriber base acquisitions in the quarter compared to the first quarter of 2007.

The company repurchased 1.3 million shares of its outstanding common stock for $9.1 million in the first quarter of 2008 and had $191.9 million remaining under its share repurchase program as of the end of the quarter.

EarthLink ended the first quarter with $320.0 million in cash and marketable securities, an increase of $31.4 million from December 31, 2007. Additionally, in April 2008, as a result of Platinum Equity's acquisition of Covad, EarthLink received $50.8 million in complete repayment of our debt investment in Covad. The Company will receive an additional $6.3 million in May 2008 in payment of our equity investment in Covad.

For the full year 2008, management is increasing its previously issued guidance. Management now expects to generate Adjusted EBITDA of $245 million to $260 million, income from continuing operations of $153 million to $163 million, and free cash flow of $215 million to $235 million.

EarthLink offers its web hosting business customers value-added tools for designing web sites, monitoring site visitor traffic, and encrypting sensitive information EarthLink Business Solutions is the business services unit of Atlanta- based EarthLink Inc. Together with New Edge Networks, EarthLink Business Solutions is a total business communications solutions provider. It is a single source provider for businesses, offering high-speed Internet access, web hosting, ecommerce, remote access to VPNs, and fully managed private wide area networks. Customers include single-location businesses as well as midsize and large enterprises with complex network requirements throughout the United States. EarthLink Business Solutions has offices in Atlanta, Vancouver, Wash., and Pasadena, California.

For more information about Earthlink Business Solutions, please visit: www.earthlink.biz.

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