Bear Criticism #1: Lack of Focus and Direction
The past year was a time when Excite@Home should have focused exclusively on landing new customers with a simple message and offer:
"With our service, you can connect to the Internet at superhigh speeds, without using your phone line, and with 'always-on' access. Period. Do you want this service?"
Jeff, the MSOs do most of the advertising, not ATHM. The ads I've seen have been similar to the simple message you describe. Perhaps you're confusing ATHM's "selling" of their strategy to investors with advertising to customers.
You follow with:
Instead, Excite@Home is focused on launching a business website portal called Work.com, buying BlueMountainArts for nearly a billion dollars, and expanding Excite's online content partly in order to take on Yahoo! These items are the main news that we've heard about from Excite@Home's office.
Yes, this confirms that you are confused.
The news that I've wanted to hear, though, is that the company is signing many, many more customers than everyone expected a few years ago, just like America Online (NYSE: AOL) did in the past. But we're not hearing that. At all.
It is the MSOs who sign and provision new customers. If you have a beef then it is with the MSOs. AOL was dial up and dial up does not require a truck roll. Perhaps you were misled by TJ's and Bell's assertions of last year about how the self install regime would begin in Q4 of 99'. They now claim they meant software self install, and that, obviously, every new customer will require a truck roll.
Bear Criticism #2: Lack of Focus Resulted in Lost Opportunities
.... Man! AOL basically gave @Home a few years to capture most of the high-speed customers in any market that it served, and yet @Home only attempted to do so halfheartedly!
This is a completely unfounded assertion.
Clearly, Excite@Home missed the vital lesson offered by AOL. That lesson was this: Scale as quickly as possible to millions of paying customers; lock those customers into your service; then begin to focus on other revenue streams.
Instead, Excite@Home squandered its lead and now is losing its competitive advantage. The time that the company should have spent focused on landing several million high-speed converts before competition emerged was instead spent on a scattered focus and a mixed message.
Again, it is the MSOs who sign and provision new customers. Example, ATHM's AOL switch promotion was so successful that the MSOs were overwhelmed and directed ATHM to back off on that particular promotion.
What is clear is that your investment premise was based upon AOL's history and your strategy hasn't worked out. Don't criticize ATHM for failing to live up to your misconceptions.
Here was a company that could have had one of the most powerful marketing messages of any company the past few years, during the Internet "boom," but it forgot to focus on its one competitive advantage: high-speed access. Now this competitive advantage is being erased by emerging, competing services. In fact, many analysts believe that DSL will soon surpass cable access in popularity.
Are you confused again? Do you mean marketing to investors or consumers? Their competitive advantage is their network and the last mile delivery mechanism.
Bear Criticism #3: Lack of Self-Ownership!
My final criticism is largely responsible for the company's lack of focus: AT&T is a majority voting shareholder. This means that Excite@Home is not even free to call its own shots. It has AT&T to answer to, and it has AT&T willing it into decisions. This should be very disheartening to Excite@Home investors.
This is clearly wrong. Most of the evidence you cite in items one and two above were decision made by TJ and Bell with influence from Kleiner, Perkins, et al.
It's clear that you don't know this company. You're letting the price action influence you. Yes the decisions you cite have defocused the company, the impact of which has not been a slower than possible subscriber growth rate, as you believe, but rather a crisis of investor confidence in management, as well as the squandering of assets (stock) that could have been used to expand internationally. |
