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To: Sparks who wrote (618)	11/10/1997 10:46:00 PM
From: Mkilloran	Respond to of 29970

Second place is better than trailing the pack....................... Your limited by the cable company that services your area. Road Runner may not be quite as nice as @home ..............................but is still better than the alternatives that we in the non-cable modem world have to chose from...................... ....Someday Santa will bring me a cable modem right now all I have is a lump of coal

To: Sparks who wrote (618)	11/11/1997 11:04:00 AM
From: IKM	Read Replies (1) \| Respond to of 29970

Investors in cable modem access (CMA) should understand that the competition is not between different service providers such as ATHM, TWX, and UMG, who have for the most part mutually exclusive service territories. It is with other delivery technologies, such as xDSL, DBS, point-to-multipoint microwave. Rather than an exhaustive explanation as to why, let's accept that CMA is the technology likely to capture the largest market share of consumer access, and with good prospects for small business. On the other hand, they do all compete for your investment dollars. Then you should consider who has the best business plan, based upon what assumptions, and who is most likely to execute against their respective plan. Also, how fully has Wall Street valued those prospects. ATHM may be an attempt to harvest synergies by partnering several MSOs, but I can't see what those synergies might be, other than in coherent national marketing efforts and shared cost of a backbone and content. Also, some clout in negotiating with advertisers and exclusive content providers. Otherwise, it has thus far been a very successful instrument for raising capital to further the data efforts of already highly leveraged MSOs. For these benefits, ATHM foregoes 65% of the generated revenue stream, avoids most of the capital cost of network upgrades, but is captive to the technical capabilities and independent financial situation of the partner MSOs. It is also dominated by TCI, with a very small float, subject to manipulation. The MSOs, of course, give up 35% of the revenue stream to ATHM. TWX and UMG, on the other hand, are working cooperatively (UMG has 25.5% of most of TWX's cable holdings) and individually are ahead of any one ATHM partner in deployment of modem-capable infrastructure, although Cox is close behind. They both are keeping 100% of their respective revenues from modem deployment, and are not subject to as much infighting as will occur on ATHM's BOD (there are a lot of outsized egos in the CATV business). UMG already has much of its backbone in place. I presume the same for TWX, although I don't know for sure. As investments, TWX is a very large, very leveraged, diversified media company. An investment in them is in much more than CMA. UMG, on the other hand, is very tightly focused, has been divesting itself of non-core holdings and raising in excess of $1 billion cash, even before Gates. As it spins from U S WEST as an independent company vs. its current incarnation as a tracking stock, it become a very attractive acquisition target. Its attractiveness is based not on its cable modem business, but on the upgraded networks and imminent foray into local telephone access. By this I mean telephony over cable, but not internet telephony. This local access is very attractive for long distance companies anxious to protect their market share in what is rapidly becoming a commodity business (i.e., long distance). By comparison with its peers, it is lightly leveraged. UMG has had a good recent run, but it has nothing like the lofty valuation currently assigned to ATHM. So the choice is, are you a pure momentum investor, or due you believe that momentum ultimately follows fundamentals?