Excite@Home May Sell Some Media Assets to Raise Cash

Baldwin Louie — Tue, 17 Apr 2001 15:00:00 -0700

Excite@Home Corp.'s media business is performing below the company's exepctations, and it may consider selling certain media assets to raise much-needed cash, Chief Executive George Bell said Tuesday.

Meanwhile, Mr. Bell confirmed the company has had discussions with Patti S. Hart to become Excite's new chief executive. Ms. Hart is the former chief executive of Telocity Inc., which was acquired this month by General Motors Corp.'s (GM) Hughes Electronic Corp. unit (GMH). Mr. Bell said last September he would resign as CEO when a replacement is named.

But Mr. Bell said Tuesday Excite@Home, which is controlled by AT&T Corp. (T), wasn't ready to announce a new chief executive yet. The plan to name Ms. Hart to the post was reported Tuesday by The Wall Street Journal. In a conference call Tuesday morning, Mr. Bell said "it's the nonbroadband elements of our business that are underperforming right now." He added that the company would consider the sale of "nonbroadband media assets" to raise cash.

Excite@Home's core business is delivering high-speed, or broadband, Internet access over cable-television lines. Mr. Bell said the broadband business remains strong. The company reported in a press release Tuesday it added 450,000 subscribers in the first quarter ended March 31, bringing the customer base to 3.2 million.

Its media business, which includes the Excite Web portal, is the source of the company's weakness. The downturn in the online-advertising market has hurt Excite's revenue, and executives don't see a turnaround anytime soon.

"We see a soft media market at least through the end of the year and beyond," Mr. Bell said, adding that 2001 media revenue would be "substantially" less than the $308 million posted in 2000.

Excite@Home's disclosure that it would consider selling media assets came as the company said it needed to raise at least $75 million to $80 million by the end of the second quarter. If the company doesn't raise that money, it faces "a material adverse impact on the company's operations and liquidity."

Excite@Home said it expects to report a first-quarter loss of 14 cents to 15 cents a share, slightly wider than previous guidance of a loss of 13 cents to 14 cents a share. It also expects revenue of $140 million to $145 million, just short of the previous guidance of $143.8 million to $148.8 million. A year earlier, Excite@ Home lost one cent a share on revenue of $138 million.

The company also expects to report a wider-than-estimated loss and lower-than- expected revenue for full-year 2001, mainly due to the media weakness. It will take an impairment charge in the first quarter to reflect the media weakness.

Excite@Home ended the first quarter with $105 million in cash and short-term investments, down from $201 million at Dec. 31.

Excite@Home CEO Mr. Bell said the company's cash position was about $20 million lower than projected. Most of the shortfall stemmed from the company's decision to use cash to expand its network because it didn't have a lease arrangement with the equipment vendor. Mr. Bell said the company now has lease deals in place for the rest of the year.

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Excite@Home May Sell Some Media Assets to Raise Cash