Well not exactly out of favour. This out of the Internet Stock Report. Good luck to all. Niv
Excite@Home: Getting Out of the Dog House
Excite@Home has built an impressive portfolio of strategic assets. Yet,
Wall Street is unimpressed. Is it time to take a look?
I have been using Excite@Home's cable modem service for a year and a
half. While it is not perfect, the speed performance is far superior to
my old dial-up account.
As more and more people use the Web, they will want speed, too. What's
more, the leading-edge Net technologies -- video, voice, etc. --
requires lots of firepower. Obviously, the future is broadband.
In this environment, it would seem that Excite@Home (ATHM) would be a
perfect investment. It is a first-mover, which has locked-up cable
agreements that cover 72 million homes. Of course, there is the
Excite.com portal, the MatchLogic division (which provides advanced
marketing technologies) and @Work (Internet services for businesses).
Yet, the stock has been a dog. Yesterday, the stock closed at $34-3/16.
The 52-week low is $33.
Perhaps, a big problem is that the company is a hodge-podge of assets.
Thus, it can make it difficult for Wall Street to value. What's more,
the legal ownership rules regarding the cable agreements are
mind-boggling.
But looking at the company, there are many bright spots. In the last
quarter, the company made its first profit (true, it was small:
$514,000). Revenues were $128.8 million, which was up from $73.3 million
in the year-ago period. In all, the company has over 1 million
subscribers. Keep in mind that the No. 2 cable modem service, Road
Runner, has 550,000 subscribers.
To help clarify the valuation of the company, Excite@Home plans to
create a tracking stock that separates the company into content and
broadband. Actually, yesterday Excite@Home announced a new joint venture
with Dow Jones to create work.com, which is a portal for businesses
(focusing on the lucrative, but hard-to-target small and medium sized
business market). The venture will combine the assets of @Work and
dowjones.com. Sometime this year, work.com is expected to go public.
Excite@Home is a complex company and it will probably take some time for
it to convince investors. But once the company is finished launching its
tracking stocks and spin-offs, the picture will become clearer --
getting the stock out of its rut. |
