I have been using Excite@Home’s cable modem service for a year and a half.
While it is not perfect, the speed performance is far superior to my old
As more and more people use the Web, they will want speed, too. What’s
more, the leading-edge Net technologies — video, voice, etc. — requires
lots of firepower. Obviously, the future is broadband.
In this environment, it would seem that
would be a perfect investment. It is a first-mover, which has locked-up
cable agreements that cover 72 million homes. Of course, there is the
Excite.com portal, the MatchLogic division (which provides advanced
marketing technologies) and @Work (Internet services for businesses).
Yet, the stock has been a dog. Yesterday, the stock closed at $34-3/16.
The 52-week low is $33.
Perhaps, a big problem is that the company is a hodge-podge of assets.
Thus, it can make it difficult for Wall Street to value. What’s more, the
legal ownership rules regarding the cable agreements are mind-boggling.
But looking at the company, there are many bright spots. In the last
quarter, the company made its first profit (true, it was small: $514,000).
Revenues were $128.8 million, which was up from $73.3 million in the
year-ago period. In all, the company has over 1 million subscribers. Keep
in mind that the No. 2 cable modem service, Road Runner, has 550,000
To help clarify the valuation of the company, Excite@Home plans to create a
tracking stock that separates the company into content and broadband.
Actually, yesterday Excite@Home announced a new joint venture with Dow
Jones to create work.com, which is a portal for businesses (focusing on the
lucrative, but hard-to-target small and medium sized business market). The
venture will combine the assets of @Work and dowjones.com. Sometime this
year, work.com is expected to go public.
Excite@Home is a complex company and it will probably take some time for it
to convince investors. But once the company is finished launching its
tracking stocks and spin-offs, the picture will become clearer — getting
the stock out of its rut.