Excite@Home Corp. continues to lure
cable modem subscribers to its brand of high-speed services, but blamed
hardware shortages for losing steam in its quarterly review of new
subscriber growth.
In the second quarter of this year Excite@Home’s
residential broadband subscriber base grew to more than 1.8 million
clients, which reported serving more than 1.5 million subscribers at the
end of the first quarter.
While Excite@Home’s subscriber additions in the second quarter totaled more
than 300,000, new subscribers, its growth rate declined approximately 10
percent from the first quarter of 2000. Excite@Home said that the slowdown
was the result of a temporary interruption in the supply of cable modems
available to several of its cable partners.
Canadian cable company Shaw Communications
Inc. experience the same type of new subscriber slowdown in May. The
firm attributed its decrease in new subscriber growth to a general shortage
of cable modems supplied by Motorola Inc.
Motorola and other manufacturers are spending billions of
dollars to boost modem and chip production capacity to meet the demand for
cable modems. Analysts predict that the supply setback is merely a
distribution hiccup.
George Bell, Excite@Home chairman and chief executive officer, said second
quarter results continued to build upon its three key objectives for the year.
“First, we accelerated our broadband network deployment to stay ahead of
the incredible demand for our broadband service, making significant
progress on increasing the reach and capacity of our network,” Bell said.
“We added six million homes to our serviceable footprint this quarter, and
with the temporary shortage of cable modems behind us we are well prepared
to add subscribers at unprecedented rates.”
Earlier this week Amsterdam-based United Pan-Europe
Communications NV teamed up with Excite@Home to form one of the largest
broadband companies outside of the U.S.
The merger combines UPC’s Chello Broadband
NV subsidiary with Excite@Home’s international operations in Europe,
Latin America, Australia and Japan. Dubbed Excite Chello, the combination
of the companies makes Excite Chello the operator of the largest cable
footprint outside North America.
Bell said the merger with Chello was part of its second goal, which is
designed to accelerate its international growth.
“Second, we greatly accelerated our international strategy,” Bell said.
“Our new joint venture with Excite Chello establishes the largest broadband
footprint outside of North America and plans to double the number of Excite
portals available around the world.”
Bell said the consolidating its portals into a single platform further
streamlined its operations.
“Lastly, we moved to consolidate our content efforts onto a single platform
by launching @Home 2000, the Excite broadband portal and a re-design of our
Excite narrowband portal,” Bell said. “The unique aspects of the service
represent a huge opportunity for Excite@Home to drive subscription and
media revenue growth.”
Excite@Home’s broadband footprint grew to more than 32 million upgraded
cable homes passed, up 26 million homes passed at the end of March.
Penetration in Excite@Home’s North American markets reached 6.2 percent,
nearly doubling market penetration of 3.6 percent posted a year ago.
Excite@Home Business Solutions, the company’s commercial services division,
provides @Work-branded high-speed access to businesses. The commerce
division reported it supplied 7,600 business clients with high-speed
Internet services as of June 30, 2000.
Tra
ffic on Excite@Home’s broadband network continues to grow at a rate
greater than the rate of broadband subscriber growth. Peak traffic levels
in June reached 6.5 gigabits per second, an increase of 30 percent from
peak levels observed in March.
Overall, Excite@Home its second-quarter loss was slightly smaller than
expectations and said its sales rose sharply as it continued to sign up new
customers for its high-speed services.
The company reported a pro forma second-quarter loss of $45.3 million or 11
cents per share, compared with a loss a year earlier of $5 million or one
cent per share. The consensus among analysts projected that Excite@Home
would report a loss of 12 cents per share, so the broadband service
provider beat “The Street” by a penny.
The pro forma loss excludes $625.8 million in expenses for the amortization
of goodwill and other intangible assets and other non-operating expenses.
Including all these items, the company had a net loss of $668.3 million or
$1.69 per share.
Revenues increased to $157.6 million from $100.4 million last year.
