Hurt by transaction costs, Earthlink (ELNK) revealed on Tuesday a sharp drop in fourth-quarter profit, though its revenue still climbed ahead of expectations and costs remained tight.

The Atlanta-based company posted net income of $5.3 million, or 5 cents a share, compared with $193.3 million, or $1.79 a share, in the same quarter last year.

Excluding one-time costs, mostly related to the December acquisition of Deltacom, the company earned 19 cents a share, just ahead of average analyst estimates polled by Thomson Reuters of 17 cents.

Revenue for the provider of dial-up Internet, broadband and high-speed Internet access was $166.8 million, up from $164.5 million a year ago, trumping the Street’s view of $144.78 million.

“These results are indicative of the long-term thought process and diligent approach with which EarthLink operates its business,” said Rolla Huff, the company’s chief executive. “We believe this business discipline and operational rigor will allow us to create value for our shareholders and position us to continue to invest in the future of EarthLink as an IP managed services company with a path for growth.”

Earthlink lost 79,000 subscribers in the fourth-quarter, an improvement from 93,000 in the prior period and 132,000 in the year-earlier quarter. Sales were helped by record performance in customer churn, which improved to 2.8% from 3.2% in 2009.

Earnings were cushioned by lower expenses, an effort by the company to manage costs in line with revenue trends. Total sales and marketing, operations, customer support and general and administration expenses were $50.9 million, down 10% from the year-earlier.

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