In case anyone missed this in the Wall Street Journal. My read is generally positive, certainly for the long term.
January 15, 1999
Egghead.com Shares Get Lift
From AtHome Auction Deal
By LISA BRANSTEN
THE WALL STREET JOURNAL INTERACTIVE EDITION
SAN FRANCISCO -- Shares of Egghead.com, the online software and
hardware store, got a boost Thursday from news that it signed a deal to be
an anchor tenant on the auction site being launched by cable-Internet
service AtHome.
In Nasdaq Stock Market trading, Egghead shares advanced 1 1/4, or
5.5%, to close at 24 on a mixed day for most Internet shares. Shares of
AtHome slipped 3 1/8 to 102 5/8, also on Nasdaq.
Meanwhile, the Nasdaq Composite Index fell 39.92, or 1.7%, to 2276.89
and Morgan Stanley's high-tech 35 index dropped 17.89, or 1.9%, to
931.37.
Nicole Vanderbilt, an analyst at market-research firm Jupiter
Communications, said the deal won't necessarily provide a windfall for
Egghead, given AtHome's relatively small subscriber base. She added,
however, that the deal could be beneficial in the longer term because early
tenants of online sites tend to get the cheapest real-estate deals.
The deal is a three-year agreement. Neither side would disclose the
financial terms.
AtHome is a provider of high-speed connections to the Internet primarily
through cable modems, and is backed by cable heavyweights
Tele-Communications Inc. and Comcast. The service has 330,000 users
scattered across North America.
Egghead is notable as one of the only bricks-and-mortar retailers to have
completely abandoned traditional retailing in favor of a Web-only
presence. Shares of the company initially spiked on enthusiasm for that
move but then fell back as low as 4 5/16 in early October, before
recovering on the latest round of enthusiasm for Internet retailers.
Egghead's chief marketing officer, Jon Brodeur, said that although
AtHome's user base was small in contrast to America Online's 15 million
members, he's banking on fast growth in the high-speed service.
"There's no question that what we wanted to do here was lock in on a
growing market," he said. He said that one of the advantages of a
high-speed service is that users of the service were more likely to conduct
transactions because of the ease with which they can receive information.
"We really feel that people are frustrated working with the Internet from
home because of narrow bandwidth," he said. "The amount of usage of an
AtHome member ... is higher and the likelihood of buying is higher" than for
people who use a regular phone line.
AtHome said it was actively seeking other autioneers for the new site but
that Egghead and Internet Shopping Network -- the site's other anchor
tenant -- would receive the most prominent play.
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