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Technology Stocks : AUTOHOME, Inc -- Ignore unavailable to you. Want to Upgrade?

To: Blue who wrote (20082)	3/10/2000 6:42:00 PM
From: E. Davies	Read Replies (3) \| Respond to of 29970

Dont think this has been posted here. It doesnt get any stronger worded than this. \http://www.ragingbull.com/mboard/boards.cgi?board=ATHM&read=39928 From the yahoo bd. Prudential defends Athm... We see the recent decline of ATHM shares as unprecedented, a huge over-reaction and an exceptional buying opportunity. We believe ATHM shares are significantly undervalued and a compelling investment at current levels. ú The battle is not over open access nor about DSL vs. Cable as technologies. Instead, investors should, we believe, view ATHM as a content and services supplier to the cable companies (MSOs) who are at war with the telephone companies for control of the customer relationship. ú ATHM shares are likely to see continued pressure until the Portland ruling is released. We expect this over the next 60 or so days at which time we expect significant short position covering. ú Exclusivity remains a controversial topic, we have great reason to expect ATHM?s position within the cable infrastructure will be further strengthened as MSOs renew and extend relationships with ATHM including the potential use of DSL as an augmenting broadband delivery vehicle. ú We believe the battle today is about bandwidth. This is not a choice of cable vs. DSL and we note that the relationships between carriers, content providers, commerce enablers and competitors will be complex and complicated. Investors should expect ?coopertition? between these parties which we think could further confuse Wall Street on a short term basis. ú MSO?s have spent a small mint creating, supporting, and developing the @Home name. We do not think that they will be so quick to adopt a new brand, brand identity and service headaches in the wake of exclusivity expiration. Summary: We see the recent weakness of ATHM shares as (a) unprecedented; (b) a huge over-reaction; and (c) an exceptional buying opportunity. Given the increasing competitive pressure between MSO?s and telephone carriers for account control and the enormous time, knowledge and capital commitments requisite for the MSO?s to offer ATHM-like services independently, we are not concerned about the end of exclusivity or ATHM?s ability to meet our current, or forward expectations for members, revenues or profits. We remind investors that exclusivity runs through the middle of 2002 at a minimum and will abate over approximately a four year period with all parties released of exclusivity obligations by the end of 2006. Short-term, we note that system operators, such as AT&T, have committed to complete their infrastructure upgrades by the end-of-year 2000 or early 2001. Under the current agreements, this means that the only product / service that can be offered is that offered by @Home. We further note that a full-scale branding and promotional effort are underway in many regions in which the local MSO has adopted the @Home moniker as part of their own service names (e.g. Comcast@Home, ATT@Home, etc.) We find it highly unlikely that the MSOs will disregard these programs and branding efforts once exclusivity ends ? further suggesting that the ATHM relationships are, in fact, much stronger and more likely to be renewed going forward. Near term, we believe ATHM shares are being held under the black cloud of the Portland decision. Paraphrasing Prudential Securities? Washington Research Office?s Susan Lynner ? there is no clock set on the U.S. judiciary. We will have to wait and see. A great deal of pressure is at hand. AOL, AT&T, the Federal Communications Commission (FCC) and ATHM all stand on the same side of this argument. The political and economic ramifications of the decision are significant, and we look forward to a positive outcome ? one in which mandatory open access can not be imposed by a local, municipal or state-based regulatory body. We will have to wait and see. In the interim, we point investors to three items: (1) Portland, though important, is a bit of a side show, in our opinion. We feel that the real battle lines lie between the MSO?s and the telco?s; (2) To this end, we see ATHM as a supplier and critical ally of the MSO?s in the battle for the customer; (3) ATHM has the ability to capture DSL services as part of a branded broadband service offering within the MSO?s operating regions ? offering the MSO the best of all possible worlds (and a stronger defensive position against the onslaught of DSL service offerings); and (4) that broadband demand is only now reaching mass market, enjoying strong organic growth, viral spreading patterns and increasingly lower customer acquisition costs. Given the recent weakness, we think current ATHM pricing is exceptionally compelling and represents a ?table pounding buying opportunity.? We are reiterating our ?strong buy? rating and $125 price target based on a discounted cash flow (DCF) analysis.