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From Bloomberg Business News:
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BN 7/11 At Home Shares Surge on 1st Day on Intel Investment (Update4)
At Home Shares Surge on 1st Day on Intel Investment (Update4)
Redwood City, California, July 11 (Bloomberg) -- At Home Corp. shares rose 62 percent in their first day of trading as Intel Corp. bought a stake in the provider of high-speed Internet access over cable-television systems
Intel bought several hundred thousand shares of At Home, said two people familiar with the $94.5 million IPO. Intel's investment comes after Microsoft Corp. last month bought a $1 billion stake in cable-TV provider Comcast Corp.
The investments are strong signs that technology companies are choosing cable television instead of much slower telephone lines to provide data, news and even shopping services to people in their homes. The investments are also giving a boost to the stocks of cable-TV companies.``Cable has been more successful than the telephone
companies at offering high-speed online access to the residential
market,'' said John Aronsohn, a senior analyst at the Yankee
Group, adding that At Home was a ``much more jazzy brand'' than
other cable services such as Time Warner Inc.'s Road Runner.
At Home shares rose 6 1/2 to 17 in trading of more than 12.6 million, making it the second-biggest percentage gainer and second-most active stock on U.S. markets. Earlier, the shares touched 25 1/2, more than double its IPO price of $10.50.
In a sign of strong demand, the Redwood City, California- based company increased the price and number of shares it sold in the IPO. At Home sold 9 million shares instead of a planned 8 million, and boosted the offering price range to $9 to $11, from $7 to $9 earlier this week.
The IPO represents a 7.7 stake and values At Home at $1.23 billion with 117.5 million shares outstanding. The stock is trading on the Nasdaq National Market under the ticker ATHM.
Intel Stake
Chipmaker Intel paid millions of dollars for its stake in At Home as it expands its investments in the Internet through companies that have recently gone public.
Santa Clara, California-based Intel also recently boosted stake in CNET Inc. to 6 percent from 4.5 percent. CNET, which provides Internet content and television programming related to computers, went public in 1996. ``We have a close relationship with the cable industry and
an evolving relationship with At Home,'' said Tom Waldrop, an
Intel spokesman. He declined to comment further.
Tele-Communications didn't immediately comment on the transaction.
Intel, whose chips run more than 85 percent of the world's PCs, is moving to boost overall demand for computers to further increase its share of the market. Its new MMX chips, for one, enhance audio and video that are widely used on the Internet.
Last month, Microsoft completed its $1 billion purchase of an 11.5 percent stake in Comcast as part of an effort to provide high-speed Internet access over cable-TV lines and expand the use of its software and other products over the global computer network.
Philadelphia-based Comcast said it plans to use the cash to upgrade its network for interactive services.
Cable-TV Shares
The IPO also lifted shares of cable TV providers. At Home is more than half-owned by some of the biggest cable-TV companies: Tele-Communications Inc., Comcast, and Cox Communications Inc.
At Home has contracts to sell its modems and operate its Internet service with those and four other cable companies --Rogers Communications Inc., Shaw Communications Inc, Marcus Cable Co. and Intermedia Capital Partners IV LP.
The shares of Tele-Communications rose 7/16 to close at 15 3/4, while Comcast rose 7/16 to 20 3/4. Cox stock gained 1/4 to 25 5/16.
Cable Modems
At Home's service includes cable modems that are about 100 to 200 times faster at pulling information off the Internet than traditional PC modems.``It changes the way people use the online world at home,
and it makes it something they might use much more frequently and
much more casually,'' said Emily Green, an analyst at Forrester
Research Inc.
At Home is testing its service in parts of 13 cities and communities. Cable-modem service, including Road Runner and Cablevision's Optimum, is available in 25,000 of 68 million cable-TV homes in the U.S. About 7 million homes will have the new service by 2001, analysts said.
At Home has the potential to do very well, though it has a long way to go, said Scott Schoelzel, a portfolio manager at $600 million Janus Olympus Fund. Janus Olympus bought shares in the offering.
`` The performance characteristics look terrific on paper,'' Schoelzel said. ``If they can really operate this business, they could make it into the mother of (Internet service providers).''
Morgan Stanley, Dean Witter and Merrill Lynch & Co. managed the offering, with Alex. Brown & Sons Inc. and Hambrecht & Quist.
--Marion Gammill in the Princeton newsroom (609) 279-4097, with reporting by Jon Friedman in New York and Duncan Martell in Princeton/sgp/rec
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