EarthLink Loses Money, Buys MSP Anyhow

Earthink lost gobs of money last quarter, but the Frost & Sullivan (News - Alert) poster child for great IT services spent $22 million to buy MSP CenterBeam anyway.

In its latest quarter, Earthlink lost $236.4 million, but the company did a one-time “goodwill impairment” charge of $256.7 million. Without that charge, the loss is $7.5 million.

So what the heck is a goodwill impairment? This is an accounting technique used by public companies to account for changes in their market value, similar to a write-down.

For instance, if a public company makes an acquisition, and the value of that asset falls, you could do an impairment. The same is true if the company’s reputation is harmed and its overall value falls.

CenterBeam is located in the epi-center of Silicon Valley in Sunnyvale. Aimed at mid-sized businesses with multiple locations, the company focuses primarily on remote managed IT services. Backing all of this up is an IT Support Center with 140 staffers that handles application and desktop support, as well as help desk.

In fact, the IT services market, which Frost & Sullivan praised it for, is just what EarthLink was digging into. “The acquisition of CenterBeam will fast-track our IT Services product development by providing us with critical scale and complementary product capabilities geared towards our multi-location business target market,” said EarthLink Chairman and Chief Executive Officer Rolla P. Huff.  “CenterBeam's advanced set of products, tools and processes will enable us to quickly bring a robust set of remote managed IT Services and collaboration services to market. Additionally, CenterBeam's IT Support Center will provide expertise, scale and redundancy to our existing EarthLink TechCare remote help desk.”

One item Earthlink is particularly interested in is the CenterBeam 365+ cloud suite. The fact this sounds so similar to Microsoft (News - Alert) Office 365 is no coincidence – it’s based on Office 365! A big difference is how Microsoft and CenterBeam handle Exchage in the cloud.