@Home's Time Has Finally Passed

Stripped of its Excite.com portal and its Internet traffic, the eight-year-old @Home cable-modem network died March 1 after a prolonged financial illness. There were no services.

The life and death of the once high-flying cable-modem venture indeed reads like a telecom obituary.

It was born in 1995, when former Tele-Communications Inc. executive Bruce Ravenel and venture capitalist John Doerr began working on the idea of sending Internet data over cable transmission lines. Doerr and fellow venture capitalist Will Hearst took the idea to Milo Medin, then a networking engineer at the National Aeronautics and Space Administration (NASA).

Medin hammered out the system's technological underpinnings, and by March of that year the @Home Network was founded, with backing from TCI and Silicon Valley venture capitalists Kleiner Perkins Caufield & Byers.

In 1996, the first customers on TCI's Fremont, Calif., system, tapped the fledgling cable-modem network. And on July 11, 1997, At Home Corp. went public, with shares priced at $10.50.

In January 1999, At Home married Excite Inc. to become Excite@Home Corp. By the end of that year, it had racked up 1 million cable-modem subscribers among its affiliates, including TCI successor AT&T Broadband, Comcast Corp. and Cox Communications Inc.

But in March 2000, the company experienced the first stages of affiliate-wasting disease, as Comcast and Cox renegotiated their contracts to allow them to exit their exclusive cable-modem service arrangements as of June 2002.

Board members from Cox and Comcast stepped down, and AT&T Corp. agreed to assume more representation on the board, eventually using its own stock to buy out Cox and Comcast shares and increase its ownership to 23 percent, with a 74-percent voting interest.


Even as subscribership climbed to 3 million at the beginning of 2001, financial troubles were mounting. In April 2001, former Telocity Inc. chief Patti Hart was named the new CEO of Excite@Home, and former CEO George Bell also resigned as board chairman.

Plummeting media and advertising revenues and devalued new-media assets — mostly stemming from the portal side of the business — were a mortal blow, and after a series of layoffs, the embattled company filed for bankruptcy on Sept. 28.

It's a company that went from the No. 1 broadband provider to number none.

In 1999 Excite@Home's market capitalization — the number of shares held by investors, times its stock price, reached upwards of $3 billion, with shares hitting a $99 zenith on the NASDAQ market in April of 1999. In recent weeks, the market capitalization had dwindled to a mere $2 million, with shares trading between a penny and six-tenths of a cent on the OTC Bulletin Board.

Operationally, the company appears also to have all but expired. For weeks, calls to the company's headquarters in Redwood City, Calif., have gone unanswered, and electronic-mail messages sent to the lone remaining information contact bounce back.

A "hotline" for vendors owed money still states that AT&T Corp. is buying the company's assets, even though that deal fell through in December.


Apart from subscribers who've moved to networks operated by their cable system, Excite@Home survivors include the Excite portal and search engine, sold to InfoSpace Inc. for $10 million; the BlueMountain.com electronic greeting card business, which it bought in December 1999 for $780 million in cash and sold to American Greetings Corp. for $35 million in cash; the Webshots online photography site, sold back to its original owners for $2.4 million; and most of the enterprise @Work assets, sold to New Edge Networks, a Vancouver, Wash.-based broadband business access provider, for $1.5 million.

The fate of its remaining network hardware assets is unclear.

Last fall, AT&T Corp. bid $307 million for the gear, which included servers and routers, but @Home bondholders protested that AT&T had made a low-ball offer.

AT&T withdrew the bid in late November.

When contacted, a lawyer representing the company indicated @Home is only planning to sell off its furniture at this point.

It is doubtful, though, that the company will take the reorganization route under its Chapter 11 bankruptcy, according to Yankee Group analyst Rob Lancaster.

"I don't think the company is going to come back, but an ISP may buy the name," he said. "The name still carries some value just from a mind-share perspective. So whether or not the At Home as we know it comes back is doubtful; however, we may see an At Home in the future."