At Home's IPO Sparks Frenzy,
Setting Value at $1.99 Billion
By DEAN TAKAHASHI
Staff Reporter of THE WALL STREET JOURNAL
At Home Corp.'s initial public offering touched off a
buying frenzy, resulting in a market valuation for the
Internet-related start-up of more than $1.99 billion after
the first day of trading on Friday.
The company (http://www.home.com) issued nine
million shares at $10.50 a share, raising proceeds of
$94.5 million for the company. The stock opened at
$24.87 and hit a peak of $27.50 a share before closing
at $17 on the Nasdaq Stock Market. With a total of
117 million shares in public and private hands, the
company has a market capitalization that exceeds that of
struggling computer maker Apple Computer Inc.
At Home, in Redwood City, Calif., has only about
7,000 customers for its high-speed Internet connection
service, despite early projections that it would hit one
million users by the end of 1996. Its service is based on
special modems that use cable-TV lines to transmit data
at speeds 200 times faster than a standard computer
modem.
Since getting its first subscribers in September, the
company has added customers in 12 markets across the
country. While it is launching services in more and more
cities, analysts estimate it could take years for the
debt-laden cable-TV companies to upgrade their
networks and offer service nationwide.
But the company has generated excitement because of
its backers. Cable-TV companies that have invested in
the company and signed exclusive distribution deals
include Tele-Communications Inc., Comcast Corp.,
Cox Communications Inc. and Rogers Cablesystems
Ltd. Other investors include Sun Microsystems Inc.,
Bay Networks Inc., Motorola Inc. and venture-capital
firm Kleiner, Perkins, Caufield & Byers.
TCI is the largest shareholder with a 39.5% stake. Intel
Corp. also said it bought an unspecified stake in At
Home after the shares went public. William Randolph
Hearst III, the publishing heir and At Home's former
chief executive, originally paid $20,000 for a
400,000-share stake that is valued at $6.8 million after
the IPO.
At Home's offering got a boost from recent events in the
cable industry, including Microsoft Corp.'s investment of
$1 billion in Comcast in what is widely seen as an effort
to jump-start that company's network-investment plans.
To complement local cable lines, At Home is building its
own proprietary network, or backbone, that is meant to
improve the speed of Internet traffic. The company also
is building a similar network, called At Work, to provide
speedier data traffic to corporations.
At Home has yet to report a profit. For the six months
ended June 30, the company reported a loss of $22.8
million on revenue of $1.8 million, compared with a loss
of $1.8 million on revenue of $676,000 a year earlier.
Most of the expenses are going toward building the
company's network and adding new subscribers.
The company faces such competitors as digital-satellite
services and a faster data service from regional phone
companies called ADSL, or asynchronous digital
subscriber line. But many industry executives expect
demand for high-speed data to prove insatiable as the
Internet's popularity takes off. Avram Miller, a vice
president of business development at Intel, said, "I've
seen the plans of the cable companies for deployment
and it's clear that cable modems will get customers in
the millions." |
