EarthLink not seeking AOL’s dial-up users

EarthLink executives, once bullish about buying dial-up Internet subscribers from companies such as AOL, said Thursday such deals would not be happening anytime soon.

The comments came as the company reported a profitable 2008 with earnings of $189.6 million, or $1.72 a share, compared to a loss of $135.1 million, or $1.11 a share in 2007. Executives said, however, that they will continue to take steps to make the company, which built its business model on dial-up customers, slimmer to ensure that it stays in the black.

“We are working hard to build a smaller but more profitable business,” said Chief Financial Officer Kevin Dotts during a conference call Thursday with investors and analysts.

The company said in a release that it “has an expanded set of strategic alternatives that we are considering.”

It has the money for deals. Last year EarthLink more than doubled its cash and securities to $534.4 million and bought back more than $30 million in stock, Chief Executive Officer Rolla Huff said during the call.

EarthLink tried to find other business opportunities last year. But with the rapidly souring economy, combined with the bad credit markets, the company hasn’t found any deals, Huff said.

It has stopped seeking dial-up subscribers from other companies, namely AOL.

“We’re not trying right now. We’re not thinking about it anymore,” Huff said after being asked several times to clarify whether the company would still consider buying the dial-up customers of AOL.

However, he appeared not to have permanently closed the door on the idea. “If we’re given a reason to think about it, there are ways to think about what we could do.”

There has been much speculation about the company’s future. Most recently, a filing with the Securities and Exchange Commission amended Huff’s contract to include payment should his job change or he exit because of a “non-public change in control event” —- such as the company being bought by a private equity firm.

In an e-mailed statement, the company said the Dec. 30 filing is “standard language” and refers to what would happen if the company went private and was no longer bound by certain regulations that publicly traded companies must follow.

Though Huff and other executives last year publicly shied away from saying EarthLink was talking to AOL, he often made it clear he wanted the company to lead the inevitable consolidation of the dial-up Internet industry. On Thursday, Huff lamented what he thought were lost opportunities.

“It’s clear that we were much more focused on this strategy than others in the industry. I think it’s a pity because as we all know you can’t recover the value of lost operating synergies, ever,” he said, later referring to it as “like money burning on the ground.”

AOL is owned by Time Warner, also the parent of Atlanta-based Turner Broadcasting System.

Time Warner’s chairman and chief executive, Jeff Bewkes, said in a conference call with analysts and reporters Wednesday that Time Warner was looking at several possibilities for AOL.

“We could spin off all or either of the parts of AOL,” he said. “I’ve also been in discussions on whether AOL would combine any of its assets with some other companies to increase scale on all sides.

Meanwhile, Huff said “nothing is off the table” as far as EarthLink’s next move.

The Associated Press contributed to this story.