@Home Scales Back European Operations
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With its renewed strategy to pare down business operations to its core competencies, Excite@Home announced plans Wednesday to close many of its European media operations.
While @Home portal operations in the United Kingdom and Italy remain unchanged, the broadband provider will shut down portal operations in France, Germany and Spain, along with several other Web sites operated out of its headquarters in London. They are: the Netherlands, Sweden, Norway, Switzerland, Poland and Denmark.
Pending local regulations on business shutdowns, @Home officials expect to close the doors in July. According to an @Home spokesperson, 85 employees were affected by the shutdowns. Some, the spokesperson said, would be relocated to headquarters in London.
Because Excite UK and Italy are joint ventures, @Home officials could afford to keep its doors open. With a 58 percent interest with British Telecommunications in the UK and 30 percent stake in Italy with Tiscali S.p.A., the company doesn't have to carry the entire financial burden.
Patti Hart, @Home chairman and chief executive officer, said a weakened Internet market worldwide made it hard to support branch offices that weren't making any money and that it allows them to focus more resources on the ones that remain.
"While it is disappointing that market conditions make it necessary to discontinue certain European businesses, it is important for us to continue to focus more closely on our strengths," Hart said. "We remain optimistic regarding the growth prospects for Excite UK and Excite Italia, and we will continue to concentrate on delivering value to our shareholders."
Hart's decision to stop operations in many European markets is a concession to the hard times that have befallen the company and the steps needed to make it profitable.
Only last year, indications were good that Excite Europe would be profitable. With roughly $2.4 million in revenues in the first quarter of 2000, a 360 percent increase over the first quarter of 1999, @Home started expanding its operations. It's Germany office alone started with 12 employees and officials expected to increase that to 40.
But the drawback on advertising dollars in the latter part of 1999 and 2000 put a crimp in portal operations, which rely heavily on sponsorship. Loss of advertising revenues, in part, led to the company's decision to focus more on its key moneymaker: broadband Internet access.
A round of layoffs at the end of April targeted mainly employees in the media operations division. Wednesday's announcement is a continuation of @Home's commitment to streamline its business plan. The European rollback is seen as another positive step to get operations back in line with shareholder expectations. A company officials said the company expects a slight improvement in its revenues as a result of the closures.
On Tuesday, Hart took steps to solidify her company's relations with two of its primary investors Comcast Communications and Cox Communications.
There are no plans to alter @Home operations at its Asian-Pacific offices.