Helio lays off about 100 employees, says sales are bullish

We talked to Helio today and confirmed the reports that the MVNO is laying off about a hundred people from its workforce of about 700. According to Helio, most of the employees being let go were needed during its initial launch period (remember, Helio went official early 2006); about 80 jobs in regional field sales offices were included in the cut (Helio says that's due to the fact that the bulk of their sales are coming from just a couple of offices) and about 20 jobs at HQ, which are post-launch redundancies. Given EarthLink's financial dire straits right now (and the firm's financial ties to Helio as a co-owner), we'd be worried, but Helio was quick to reassure us that sales are booming (July was their best month ever, and August is about to top July), no Helio flagship stores are closing, and the number of Helio kiosks will increase from 30 to 50 this year. Helio's bottom line: "we don't want to burn cash like some MVNOs do". Fair enough -- we're ALL looking at you, Amp'd.

[Via GigaOM]

[Mindfield @ Aug 30th 2007 7:58PM]

I hope I'm not the only one that initially read that with another "bull" word.

[711 @ Aug 30th 2007 8:42PM]

I hope I'm not the only one that's never heard this particular adjective before.

[garver @ Aug 30th 2007 8:52PM]

I had to reread it twice to make sure it didnt say what you thought it did.

[Amp'd @ Aug 30th 2007 8:05PM]

Hey hey hey Ryan, theres no need to pick on the deceased.

[Anthony @ Aug 30th 2007 8:09PM]

I don't really care so much about field sales or HQ folks, but if they get rid of the geniuses that write the music for their commercials- I'll be up in arms.

My 1 yr old stops & stares at the screen whenever one of their commercials comes on. Just like me.

[AndrewNeo @ Aug 30th 2007 8:25PM]

If they just sold the phones they'd be doing a lot better..

[Eric V @ Aug 30th 2007 8:40PM]

It's not a phone... It's a device.

Sorry I had to ;)

[Justin @ Aug 30th 2007 8:26PM]

Don't worry, we're keeping the musical geniuses! ^_^ But srsly, this is great for the company. Quickly adapting and devoting resources to maximize key markets is smart - especially proactively, while on the upswing.

Disclaimer: I work for Helio (and am glad the company has the wherewithal to make the tough choices necessary to succeed).

[Jamar @ Aug 30th 2007 8:52PM]

Bigger selection of phones please, preferably those that are otherwise Korea-only.

[Fatima @ Aug 30th 2007 9:10PM]

Looks like the iPhone is doing better than they thought.

[john @ Aug 30th 2007 9:40PM]

I got one instead of the iPhone. All I ask is that they stay in business for about 2 more years.

[Copperhead @ Aug 30th 2007 9:45PM]

I've been hemming and hawing about getting one of their handsets for a while...... guess I'll wait and see if they survive the quarter.

[Joel Rivera @ Aug 30th 2007 11:08PM]

Wow this is a bad news for those employees, imagine how they must be suffering the news.

Joel
http://www.best-pixels.com

[Glen @ Aug 30th 2007 11:30PM]

I would have bought one but they won't do one year contracts. Why would I sign a two-year contract for a phone and service that will be old school tech in six months?

[Xzavier @ Aug 30th 2007 11:45PM]

Well I hope those whom lost there place of employment find a new source of income soon!

Good luck guys!

[Justin @ Aug 31st 2007 12:17AM]

Indeed. Helions are a special breed and the company is still small enough that we feel like a family. Not an easy day for any of us...

Those leaving have achieved a lot and whoever snatches them up will be incredibly fortunate.

[AdamY @ Aug 31st 2007 12:27AM]

That's such a shame to hear about.

As far as MVNO's go, I really liked Helio. They had great products and seemed to have a pretty solid grasp on fulfilling the consumers desire.

Unfortunately the US carrier market is not kind to MVNOs. Particularly with mobile operators running a network through the same system that MVNO's are piggy-backing on, they've got to compete in areas that AREN'T price. There's no way a Helio or Amp'd is going to out-price their native carrier competition (those native carriers would never allow it based on the costs they pass along to MVNO for the privilege of using their network).

Unfortunately, the there are three main elements to competing as a carrier: cost, coverage, and handsets. Customer service *could* be an element, but for the most part customer service ratings are up and down across the board, I pretty much consider it a push.

So, you're an MVNO, your coverage is linked to whatever carrier is letting you piggy-back, and if you're regional you're not going to be able to make a push against a national carrier, and if you're a national MVNO, you're not going to be any better than the network you're already on. Then there's cost, once coverage is a push, cost becomes a big factor, but the difference is VZW/Sprint/AT&T has a middle-man-free environment and will continue to make money at a more substantial growth rate than the MVNO.

Then, lastly, there's handsets. But handsets are isolated. The more features you pack into them the more spectrum and carrier bandwidth are going to be used, and thus, passed along in the costs to the MVNO.

It's a pretty crappy situation to be an MVNO in the US, and I'm hoping Helio can pull through. They've got great marketing, and a killer handset lineup (I say that as a total iPhone tool, no less). I just don't know if the big guys are going to let anyone ambitious have a space in their market. You've gotta carve out a niche and stay there, lest you draw the ire of the hand that feeds...

[Jamar @ Aug 31st 2007 4:20AM]

This is why I want the past rumor of SK Telecom buying Sprint to be true. Then Helio *wouldn't* be an MVNO any longer, and could do lots more than they do now.

[AC @ Aug 31st 2007 1:44AM]

I wonder if they told employees "Don't call yourself employed!"

[Daniel @ Aug 31st 2007 2:38PM]

I don't blame Helio's PR for trying to make a bad situation look like it has been planned all along as part of their master business strategy.

But this has been done in answer to Earthlink's demand for them to step up profits and cut losses. Earthlink has pumped millions of dollars into Helio and seen no returns. This has hurt their own cash flow so much so that they are in a bad situation themselves laying off half of their own workforce.

When you have $ 100 million dollars in annual revenue but are burning through $ 90 million per quarter just to stay alive, the math is not in your favor. Helio's guidance of signing up 3 million customers by 2009 is not only impossible, but a huge overstatement by management who heavily believed in the MVNO strategy.

This is just the beginning. At the end of next quarter, Helio will be out of money again and if parent company's Earthlink and SK-Telecom don't put up, Helio is going to have to look to private banks to extend them more credit just to keep the lights on and payroll moving. They better get some funding now before we see a repeat performance to the likes of Amp'd.