Archive for the ‘Markets’ Category

Closing offices in Orlando, Knoxville and Harrisburg, Earthlink - an internet service provider, said yesterday that it will be firing 900 employees. Part of a restructuring plan that has been in full swing since CEO Rolla Huff came to office in late June, the plan also includes a $200 million share buy-back program. Shares of Earthlink sored up as much 12% and continues to climb today. Restructuring costs are estimated $60 million to $70 million, with a projected annual savings of $25 million to $35 million.

In efforts to move away from creeping sales of its dial-up service, Earthlink has been investing into public wireless hotspots and reselling DSL subscriptions. However, Earthlink has cut its outlook, citing third quarter revenue $290 million to $300 million - a net loss of $33 million to $43 million.

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Forming the third-largest PC manufacturer, behind Hewlett-Packard and Dell, Acer has announced plans to acquire Gateway for $710 million. Chief critiques of foreign take-overs have signaled that Acer’s take-over will not encounter any political resistance.

A deal that includes $1.90 for each share of Gateway. Following the news release, shares of Gateway’s sored 60 cents for a close at $1.81. A price that does not even come close to its all time high of $84 a share.

It is still unclear if Acer will integrate Gateway into its current operation, or if Gateway will continue under its current brand. A deal that would increase the company’s economies-of-scale, a joint statement by Acer and Gateway said the deal would lead to lower component costs and a cost savings of more than $150 million.

This acquisition would improve Acer’s position within the United States, particularly in the lower-end of the market. Both Acer and Gateway specialize in value-based computer systems, relying heavily on Internet and resellers for sales growth.

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