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

To: Jing Qian who wrote (8544)	4/23/1999 7:25:00 PM
From: Neal davidson	Respond to of 29970

Another perspective: From The Street.com @Home Surges on AT&T Offer to Buy MediaOne By Spencer E. Ante Staff Reporter 4/23/99 6:44 PM ET SAN FRANCISCO -- The Internet world's longest-running courtship just got one step closer to the big M. Speculation that @Home (ATHM:Nasdaq) may get hitched with Time Warner's (TWX:NYSE) Road Runner service resurfaced late Thursday after AT&T's (T:NYSE) competing bid to acquire the MediaOne Group (UMG:NYSE). All the talk drove @Home's stock up 9% Friday to 158 1/2. "It significantly enhances the likelihood that @Home and Road Runner will merge," says David Levy, an analyst with ING Baring Furman Selz. "AT&T will be more aggressive in putting the two together." To understand why the AT&T bid has rekindled the merger talks, it's necessary to get a handle on the incestuous nature of the cable industry. Through its acquisition of cable giant TCI, AT&T gained a controlling interest in cable-modem ISP @Home. That's because @Home has an unusual structure in which the broadband company is partly owned by 21 cable operators that have signed exclusive agreements with @Home to provide high-speed Internet service over their cable lines. TCI was the single largest owner of @Home with a 40% stake. After AT&T closed its acquisition of TCI last month, they took control of that stake as well as 70% of the voting rights of the company and three of 11 board seats. For its part, MediaOne owns about 34% of Road Runner, and has a "50% managerial role," says Road Runner spokeswoman Sandy Colony. The rest of Road Runner is owned by a group of powerful media and technology companies, including Time Warner, Microsoft (MSFT:Nasdaq), Compaq (CPQ:NYSE) and Advance/Newhouse. Further easing the merger possibilities is the fact that MediaOne owns 26% of Time Warner Entertainment, the Time Warner business unit that manages Road Runner. So, the theory goes, if AT&T were to buy MediaOne, it would be one giant step closer to combining the two leading high-speed Net access companies to create a broadband behemoth. "AT&T wants to make a complete Internet service," says Levy. "With @Home, Road Runner, AT&T's WorldNet and Excite, they'll have all their bases covered." Investors and analysts have been speculating for months that the two high-speed ISPs would merge. @Home president and CEO Tom Jermolak has said he would like to see the two join hands. But some AT&T executives have pooh-poohed the idea. Following Comcast's (CMCSA:Nasdaq) bid to acquire MediaOne in late March, which also rekindled merger talks, AT&T's broadband and Internet services division president Leo Hindery said the phone giant is too busy with the recently acquired cable giant TCI to consider the broadband marriage. Comcast's bid reignited merger speculation because Comcast is one of the top three equity partners of @Home, owning about 12% of the company. If the two companies merged, the combined service would have 710,000 subscribers in a coverage area that reaches 91 million homes.