Why EarthLink Shares Fell Back to Earth

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of EarthLink have lost over 11% today after releasing a disappointing earnings report with underwhelming guidance.

So what: EarthLink reported revenue of $331.6 million, a 5% decline year over year, but still better than the $328.2 million Wall Street consensus. On the bottom line, EarthLink broke even and reported no profit, whiffing on expectations of $0.02 in earnings per share. The company reported that its 5% year-over-year decline in business services revenue was still an "improvement" over 2011's 9% year-over-year decline.

Looking ahead, EarthLink sees full-year revenue for 2013 in the $1.25 to $1.27 range, which comes in slightly below the $1.28 consensus, and also below 2012's $1.35 billion in revenue. Its guidance of an adjusted EBITDA range between $210 million and $225 million, paired with an expected net loss of between $40 million and $45 million, both come in well below 2012's full-year results, which saw $280 million in adjusted EBITDA and $7.5 million in net income.

Now what: EarthLink continues to operate long past the point when most Internet users had forgotten that it even existed. But that appears to be part of the problem. EarthLink's guidance is just lousy all around, with nothing to indicate any growth ahead. Maybe it's time to consign this creaky company to the dustbin of tech history.

Want more news and updates? Add EarthLink to your watchlist now.

A better idea for 2013
The Motley Fool's chief investment officer has selected his No. 1 stock for the next year. Find out which stock it is in the brand-new free report: "The Motley Fool's Top Stock for 2013." Just click here to access the report and find out the name of this under-the-radar company.

The article Why EarthLink Shares Fell Back to Earth originally appeared on Fool.com.

Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, and technology.The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.