Don't bet on new Excite@Home bids

The company filed for bankruptcy protection Friday, announcing it had agreed to sell most of its high-speed network assets to AT&T for $307 million. Both sides said there was room for another bid, however, which the company's board and the bankruptcy judge would have to evaluate.

While not common, bidding wars over Net companies' bargain-basement assets occasionally emerge. But given the depth of Excite@Home's troubles, and the difficulties caused by its still-Byzantine relationship with the cable companies it serves, analysts say a bid countering Ma Bell's is unlikely.

"It will be difficult for another party to justify trying to outbid AT&T," wrote Banc of America Securities analyst Douglas Shapiro in a research note Monday. "With telecommunications providers commonly dismantling truckloads of new routers and switches for their scrap value, the assets probably have little value other than as an operating backbone."

An Excite@Home spokeswoman declined to comment on whether any other parties had contacted the company about making a bid. "We have an incredible network and technology services, and great employees," said spokeswoman Londonne Corder. "We think that's something that someone would want to buy."

What exactly a future inside AT&T means is still unclear, since that company is in the midst of its own breakup. Ma Bell has said the Excite@Home assets would be part of the AT&T Broadband cable division, which is now the subject of its own bidding war pitting Comcast against possible interest from AOL Time Warner, Disney and Microsoft.

Moreover, AT&T has held merger talks with local phone company BellSouth and possibly other local phone giants, sources have said. The outcomes of all those discussions, and negotiations over which elements fit in which division, will necessarily affect Excite@Home's future if it does enter AT&T's orbit.

AT&T's biggest cable partners in the Excite@Home venture, Cox Communication and Comcast, have already said their exclusive relationship with Excite@Home as an ISP will end this year, and they were looking at dissolving the relationship altogether by June of next year. The other cable companies could take over the network assets serving their own customers that are now managed by Excite@Home.

These announcements were made when Excite@Home was plunging into the most uncertain moments of its near-bankruptcy, however. Analysts say the other big cable partners may be more willing to extend their relationship with the cable modem network if AT&T is backing the service.

A source close to the situation said AT&T has been in contact with the other cable companies over the past few days, assuring them that customers' connections would be maintained through a transition even for non-AT&T subscribers.

A Cox Communications spokeswoman reiterated that her company had not yet decided how much of a role it wants in operating its own cable Net service. But the existing contract with Excite@Home for ISP service will end next June, she said.

"We're really just trying to see what it makes sense for us to control," said spokeswoman Susan Leepson. "It could be that Excite@Home, or AT&T, has a role."

Excite@Home went into bankruptcy court in San Francisco on Monday afternoon in the first stage of a process that is expected to take months. The company filed a thick stack of motions with Judge Thomas Carlson late Friday, mostly related to allowing the company to continue funding operations.

Early documents released by the court gave a glimpse at the company's projected balance sheet over the next six weeks, and listed the company's biggest debt holders.

According to the filing, the company projected it would have about $150 million in cash on the books by Oct. 6. By the end of the 13-week period ending Dec. 29, that figure would drop to $90.4 million, it said.

The company's biggest debtors are holders of bonds worth close to $1 billion. Cisco Systems Capital is owed about $50.7 million for equipment, while Sun Microsystems Finance is owed about $30.8 million