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

To: E. Davies who wrote (20533)	4/2/2000 12:43:00 PM
From: E. Davies	Read Replies (1) \| Respond to of 29970

One who was very negative on ATHM takes a softer tone: siliconinvestor.com AT&T Buys Its Way Out at Excite@Home ... By Jim Seymour Special to TheStreet.com 4/2/00 12:30 AM ET AT&T's (T:NYSE - news - boards) deal to nudge Comcast (CMCSA:Nasdaq - news - boards) and Cox Communications (COX:NYSE - news - boards) aside at Excite@Home (ATHM:Nasdaq - news - boards) remains something of an enigma. But it looks good for AT&T, and probably for Excite@Home as well. As I've written often here before, AT&T, which acquired its 25% chunk of Excite@Home when it closed its deal to buy TCI last year, had a serious problem with Excite@Home: a two-year-plus deal requiring AT&T to offer the service, and no other, on its newly-purchased cable systems. But AT&T had promised to open those systems to other internet service providers as well -- and needs to for its own sake, not just to pacify local and Federal regulators. By becoming just a carrier, not a content supplier, AT&T could welcome other selected ISPs into the fold -- just enough of them to suggest openness, and on terms it could make as tough as it wished. But not as long as the Excite@Home exclusivity was in place. AT&T has now essentially bought a couple of board seats from Comcast and Cox, giving AT&T 74% voting control at Excite@Home. In a fairly complicated deal, AT&T gave both companies sweet buyout terms, as well as the right to acquire more Excite@Home shares at a discount -- if they continue to carry Excite@Home on their own cable systems through 2006. Note that AT&T's equity ownership here does not increase, but remains at 25%. The Excite@Home exclusivity is replaced by a stretch-out deal to "feature" the Excite@Home offerings on AT&T's cable systems. AT&T's share price had a little jump, and Excite@Home's languishing shares had a bigger one, on the announcement. With this move, AT&T bought operating freedom for itself, and erased a little of the uncertainty for Excite@Home -- as well as almost guaranteeing its carriage with two major cable operators. Was that worth the $3.2 billion in cash or AT&T stock that AT&T promised Cox and Comcast, if they choose to depart the Excite@Home premises next year? You'll have to ask Mike Armstrong about that. But this deal took one big burr indeed out from under his saddle.