EarthLink Holdings Corp. (ELNK)

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EarthLink Holdings (ELNK)

Q4 2013 Earnings Call

February 20, 2014 8:30 am ET


Louis Alterman

Joseph F. Eazor - Chief Executive Officer, President and Director

Bradley A. Ferguson - Chief Financial Officer and Executive Vice President


Michael Crawford - B. Riley Caris, Research Division

Donna Jaegers - D.A. Davidson & Co., Research Division

Michael McCormack - Jefferies LLC, Research Division

Anthony Klarman - Deutsche Bank AG, Research Division



Good morning. My name is Theresa, and I will be your conference operator today. At this time, I would like to welcome everyone to EarthLink's Fourth Quarter and Year End 2013 Earnings Call. [Operator Instructions]

I will now turn the conference over to Louis Alterman, Senior Vice President of Finance for EarthLink. Please go ahead, sir.

Louis Alterman

Thanks, and welcome to our call. During today's call, we will refer to earnings slides that are available for you to review in the Investor Relations section of our website at earthlink.net.

Following our comments, there will be an opportunity for questions.

Before we continue, I would like to point out that certain statements contained in our earnings release and on this conference call are forward-looking statements, rather than historical facts. They are subject to risks and uncertainties that could cause actual results to differ materially from those described.

With respect to such forward-looking statements, the company seeks the protections afforded by the Private Securities Litigation Reform Act of 1995. These risks include a variety of factors, including competitive developments and risk factors listed in the company's SEC reports and public releases. Those lists are intended to identify certain principal factors that could cause actual results to differ materially from those described in the forward-looking statements, but are not intended to represent a complete list of all risks and uncertainties inherent to the company's business.

In an effort to provide useful information to investors, our comments today also include non-GAAP financial measures. For details on these measures, including why we use them and a reconciliation to the most comparable GAAP measures, please refer to our earnings release and the Form 8-K that has been furnished to the SEC, both of which are available on our website at earthlink.net.

After Joe's opening comments, Brad Ferguson, our Chief Financial Officer, will discuss the quarter's financial results.

Now I'd like to hand things over to Joe Eazor, our President and CEO.

Joseph F. Eazor

Thank you, Louis. Good morning, everyone, and thank you for joining us on the call today. I'm truly excited to be part of EarthLink. I believe we can create significant value but to be clear, we have a lot of work to do. I've been at the company for about a month now. And since I moved to Atlanta in January, I have embarked on a process to thoroughly examine our business, our market and our priorities. All of this is part of developing our detailed go-forward plan. So far, this has included detailed reviews of our business, meetings with hundreds of employees, discussions with our largest customers, introductory meetings with a number of shareholders and securities analysts, and reviews with selected partners and other third parties.

My goal is to complete initial planning effort and time to share the details on our next call in May. And in the meantime, here's what I've learned so far. I'm pleased with the number of things and want to give Rolla and the team a lot of credit for the aspects of the company they've built.

First, the company is put together to attract a set of capabilities that are both relevant and appealing to our target customers. Second, the company has an extensive customer base that can be leveraged, a brand that resonates with customers and the strong emerging products -- a set of emerging products in key growth areas. As a result of all this, the company has momentum in key market segments, particularly, in segments in the mid-market. Lastly, and importantly, the company has a committed set of employees with a desire to succeed and a passion for customer service. This has been evident, as I've talked to both our employees and our customers.

So while I'm impressed with these aspects of the company, we have a great deal of work to do. I don't need to tell this audience that revenue is declining, even if the decline is decelerated and margins have compressed as the company's loss scale. In my first month, I've seen that the company has a tremendous amount of complexity in its systems and its processes. Our determined employees go to great lengths to compensate for this, and to take care of our customers. That in my view, that's just not good enough and it's harder for them than it has to be to do their jobs. We need to do a number of things to ride the ship and get our performance accelerator -- performance improvement accelerated.

First, we have to deliver better and more consistent operational and financial performance. Second, drive operational excellence, a sense of urgency and world-class practices throughout this organization. Third, better align our organization, our operations to the market and deliver functional excellence. Fourth, accelerate our IT systems implementation plan and reengineer our service delivery and customer experience processes. Fifth, refine our product strategies and offerings by market segment. Sixth, continue and expand our sales and marketing transformation efforts. And seven, we have to put all this together in a clarified and focused corporate strategy that maximizes the value of all of our assets and has the right capital structure to match.

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