EarthLink Inc. (ELNK) last month installed a new CEO at its New Edge Networks subsidiary. The division has long been hyped as EarthLink’s growth engine, yet it’s stalled over the past couple of years due to leadership changes and, well, a less-than-friendly economy.
Now, however, after a year of turn-around work by an interim CEO – EarthLink COO Joe Wetzel – New Edge has brought on Cardi Prinzi, the former head of sales and marketing at TelePacific to keep momentum going. Prinzi faces some challenges. New Edge’s sales break down to about 40 percent wholesale and 60 percent retail, and overall churn has reached 2.9 percent; most of those losses stem from the wholesale side as carriers consolidate and other market conditions impact end user buying. But Prinzi is optimistic his strategies will take root and help New Edge gain traction.
New Edge was founded in June 1999 as a broadband provider for businesses. In late 2005, dial-up ISP EarthLink announced its intent to buy New Edge for $144 million, a deal that wrapped in April 2006. The merger gave New Edge additional reach to narrowband customers because it was able to speed up those connections, for payment card transactions, for example. In fact, the company recently won an award from research firm New Paradigm Resources Group for "developing a telecommunications industry-first network service that allows businesses to tag and prioritize data traffic over DSL access using up to five classes of service."
Prinzi joins New Edge as the company’s financial performance improves but still hasn’t met EarthLink’s or investors’ expectations. Wetzel, though, did the necessary “heavy lifting operationally,” Prinzi said, to position New Edge for the next maturation phase: adding customers.
“I feel fortunate to be stepping in now,” Prinzi said. “Now we can put more efforts on sales and marketing to start growing the business. We need to start spreading the word.”
Donna Jaegers, vice president and senior research analyst for investment bank D.A. Davidson & Co, said Prinzi has a solid strategy in mind.
“A publicity push would make sense,” Jaegers said. “They got the operations cleaned up and the platforms organized, so now it’s time to go sell it. The other thing going on, too, is if the economy has bottomed out, then adding sales now is good timing because you’re not fighting the headwinds of a recession.”
Indeed, New Edge has been scarred by the economic downturn, like many of its peers. Retail revenue has taken a hard hit as big-name customers including Whitehall Jewelers and Starbucks absorbed the first blows of a market crash. Whitehall filed for bankruptcy in June 2008 and Starbucks continues to close locations as fewer people opt for that daily $5 venti mocha. But Prinzi said “a big chunk” of New Edge’s revenue degradation has come on the wholesale side, “and not for any particular reason other than market conditions.”
To read the rest of this article, click here or on the source article below.
