Hi Stuart,
Since nobody has replied yet I'll take a stab at it. We probably read the same articles about this but here it goes...
The corporate alignment that you gave does not seem to favor ATHM right now. I wouldn't want to bet against MSFT either! But I think the key point is that ATHM and RR have exclusive rights to their respective cable companies. They don't directly compete and I think they realize that there will be nothing to gain by competing. For now they can build out their networks, content, and subscriber base in preparation for any type of competition from phone-based ISPs. (There are plenty of opinions on DSL and other technologies and I won't add mine but I think the bottom line is that they aren't there yet and even when they are it is an open question as to the quality of the product. Cable seems to have a comfortable lead.) As the cable ISPs mature then these two companies will likely merge. By the time that happens consumers will be using computers, set-top boxes, and perhaps other cable-based household internet appliances all of which carry @HOME/RoadRunner. Of course, those exclusive contracts do not last forever and I have no knowledge as to how loyal the cable companies are to ATHM. Perhaps somebody else knows more details about these contracts. If they expire soon and the cable companies are not loyal to ATHM then a RoadRunner product that contains more content, a more vibrant subscriber community, and more flexibility (in terms of funding) may seem more attractive. Obviously, this would be bad for our investment.
I do not know what Armstrong thinks about MSFT but Malone was quite vocal in his distrust of Gates. And he does have a valid point - money will soon be flowing from the cable but will most of it go to ATHM? AT&T? or Bill Gates? Most consumers probably just care about a fast, reliable ISP with great content.
Good-natured, non-insulting comments welcome.
Good investing,
John |
