EarthLink’s profits return in third quarter

EarthLink, the Atlanta-based Internet service provider, rebounded to a third-quarter profit and predicted 2009 earnings before interest and taxes would top analysts’ estimates.

The numbers: EarthLink had net income of $54.7 million, or 49 cents a share, compared with a loss of $79.4 million, or 65 cents, a year earlier. The company was expected to have profit of 40 cents, the average estimate of five analysts surveyed by Bloomberg. Sales fell 23 percent to $230.8 million, in line with estimates, from $298 million a year earlier.

The reasons: Absent this time were some of the one-time expenses that hurt the company in the third quarter last year, when it had $41.9 million in expenses tied to Helio, a mobile-phone joint venture, and $34.2 million from job cuts. The company cut operating expenses by 43 percent from the prior-year period and improved profit margins.

The future: Earnings before interest, taxes, depreciation and amortization, or Ebitda, will fall to $210 million to $225 million next year, a smaller drop than analysts expected. Ebitda will rise in 2008 to as much as $300 million, the Atlanta-based company said in a statement, an increase from the company’s forecast of $290 million. EarthLink’s increasing profitability will help pay for acquisitions, Chief Executive Officer Rolla Huff said.