AtHome Corp sees losses in foreseeable future
NEW YORK, May 19 (Reuter) - AtHome Corp, the high-speed Internet access provider poised to go public, said it will face "substantial" operating and net losses in the near future, after a net loss of about $24.5 million in 1996.
"The company expects to incur additional substantial operating and net losses for the foreseeable future," AtHome ( @Home) said in its May 16 filing with the U.S. Securities and Exchange Commission for an initial public offering (IPO).
Based in Redwood City, Calif., AtHome did not forecast when it will be profitable. The IPO values the company at about $760.2 million.
According to the IPO filing, the company reached revenues of $676,000 by year-end 1996, compared to nil the year before. For the quarter ended March 31, AtHome posted a net loss of $10.9 million on revenues of $806,000. It said it had a deficit of $38.2 million.
But industry analysts said making a profit is just one of several challenges for the company in its effort to deliver high-speed Internet service via cable modem networks.
One hurdle is ensuring the commitment of the cable companies who would build out and maintain the infrastructure.
"AtHome's issue is if they are going to be realistic they have to deliver access to millions of people," said John Latta, president of Fourth Wave, a technology consulting firm.
AtHome is a consortium of cable partners Tele-Communications Inc , Comcast Corp , Cox Communications Inc and venture capital firm Kleiner Perkins Caufield & Byers.
The company said it currently has 5,000 subscribers to its residential service deployed in 12 U.S. cities.
But if the company can distribute effectively, the service should take hold because it is an infrastructure-oriented Internet access provider that is faster than the competition, Latta said.
AtHome will compete with telephone companies and other direct providers which offer Internet access over standard telephone lines.
The company said its Internet access via cable modems is over 300 times faster than typical dial-up connections.
"There is not much the telcos have on their plate right now that approaches the speed of the cable," said Ted Julian, Internet research manager for International Data Corp (IDC).
Julian said the downfall for the company may be in coming to market too early, before major technical glitches can be resolved and prices lowered.
"The failure of the company could be entirely a result of too early to market," he said.
The company filed for a public offering for eight million series A common shares worth about $64.4 million. It also offered underwriters a 30-day overallottment option to buy up to 1.2 million additional shares.
With 108.6 million outstanding shares as of March 31, the IPO puts the value of the company at about $760.2 million.
The underwriters include Morgan Stanley as lead, Merrill Lynch & Co, Alex. Brown & Sons Inc and Hambrecht & Quist.
AtHome said it applied for a Nasdaq listing of ATHM.O |
