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

To: ahhaha who wrote (23600)	7/18/2000 1:32:09 PM
From: G_Barr	Read Replies (1) \| Respond to of 29970

None of the clowns either on Yahoo or here have advanced any suggestion about added value. Please tell me what this deal does for ATHM? I think you have to look at what they had versus what they got. ATHM foreign holdings until now are also only partially owned by ATHM. The foreign operations consist of something like 10 to 12 foreign operating companies which are almost all joint ventures. I think there are 7, 8 or more of these companies on the content side and I think only 3 on the access side. I think ATHM has mostly majority ownership of the content JVs and only minority ownership of the access JVs (I think some around only a 1/3 interest). I also believe that a vast majority of ATHM's foreign revenue is on the content side as the access business only have something like 60,000 subs and again ATHM is only a minority owners of these JVs. Now, ATHM takes their partial ownership interests in these foreign assets, which are mostly content assets as stated above, and rolls them into Chello for a 45 % stake in the combined entity. Chello looks a great deal like ATHM circa 1997. Thus, this deal is not unlike the ATHM-Excite merger in it’s a merger of content and broadband access, yet this time ATHM is bringing mostly content assets to the table and getting a piece of a larger access business. The bottom line from the access side, ATHM goes from having a minority interest is 3 JVs in Japan, Australia, Belgium and the Netherlands to having a near half interest in a larger broadband access business one that includes a private pan-european backbone (2.5 gigabit per second to be upgraded to 10 gigabits by 2001) and end to end network with a 24/7 network management center and regional and local data centers in place. Now what credit the investment community will give for owning nearly half a entity that will try to go public at a value of probably $5 to $7 billion dollars versus the value it gave for ATHM partial interests in all these JVs is another question. They had a chance to do something constructive and they have managed to convert a victory into a defeat. If you mean by buying Chello, we'll never know if that was ever possible as listening the CC it seemed that Chello was pretty important to the UPC folks and they may have never considered selling out and giving complete control to ATHM. In addition, remember Chello was trying to come to market in the $4 - $6 billion range so you have to wonder if ATT and the other MSO would approve of making UPC the largest shareholder in ATHM by issuing 200 to 300 million more shares, or dilution of 30 to 40% of the company, to acquire Chello, an entity losing a great deal of money at this point. For better or worse, ATT ultimately calls the shots here which means Bell probably couldn't make any bold moves it he wanted to. They could have built incrementally on existing properties by adding smaller systems which wouldn't have invited regulatory interference. This was another course they could have taken as in Europe there are not amny large cable systems that are not spoken for. This would have taken time though and I get the feeling that the company feels it needs to move quickly and do something big to fight all the negatively out there. Of course, some night call this panic. Excide Cheato is a new competing entity which will end up invading the US and taking on the old dying @Home. Not sure what you mean by this as this agreement surely has a noncompete provision and I would suspect that ATHM at least has a veto power in the new companies by-laws which would act to prevent such competition.