HACKENSACK, N.J.-GoAmerica Inc. announced EarthLink Inc. will take over its billing, customer care and network services operations under a major new partnership between the two companies, a move that also involves GoAmerica cutting its work force in half as part of a significant cost-savings plan.
GoAmerica investors roared their approval of the plan, sending the company’s stock up more than 50 percent after the news to about 26 cents per share. Shares in EarthLink dropped slightly to about $5.60 per share.
GoAmerica said its deal with EarthLink, as well as reducing its work force by about 100 employees, means it no longer needs to raise millions in new financing as previously stated.
“The transactions with EarthLink generate up-front cash while the reductions to our operating costs significantly reduce the capital required for GoAmerica to reach profitability,” said Frank Elenio, chief financial officer of GoAmerica. “As such, we believe that our business is fully funded and we are no longer pursuing our previously stated objective to raise $10 million to $15 million in new financing. We will continue to evaluate new business opportunities and consider potential investments that strengthen GoAmerica’s financial profile or strategic positioning.”
The deal also marks another significant push from EarthLink into the wireless space.
First, the company will acquire all of GoAmerica’s CDPD subscribers and a segment of its Cingular and Motient network subscriber base. Financial terms of the sale were not disclosed. Further, GoAmerica will sell EarthLink mobile solutions through its sales force and channel partnerships, and EarthLink will leverage GoAmerica’s ties to the enterprise market to expand its presence in that area. Finally, EarthLink will utilize GoAmerica’s Go.Web technology as a key component for its next-generation wireless Web offerings, and the two companies will work together to develop EarthLink-branded wireless data services for the wireless consumer market-an important new step for enterprise-focused GoAmerica.
“Wireless plays an important role in EarthLink’s long term growth strategy,” said Mike Lunsford, executive vice president of EarthLink’s Customer Experience and Everywhere initiatives.
GoAmerica offers technology that allows workers to wirelessly access corporate e-mail, intranets and the Internet.
