Excite@Home hits estimates; revenue falls
The cable-modem service provider posts a wider second-quarter loss that meets analyst expectations even as revenue fell 7 percent from last year.
Net operating loss for the quarter was $65.1 million, or 16 cents per share, on revenue of $138.6 million. That compares with a quarterly operating loss of $38.6 million, or 10 cents per share, on revenue of $148.7 million in the same period in 2000.
Wall Street expected Excite@Home to lose 16 cents per share for the three-month period ended June 30, according to a survey of analysts by First Call.
At the close of regular market trading, Excite@Home shares were down 11 cents, or nearly 5 percent, to $2.15. The earnings report was issued after the close of regular trading. In after-hours trading, Excite@Home shares fell 15 cents, or about 7 percent, to $2.01.
Excite@Home Chief Executive Patti Hart said the company was able to meet expectations despite the tough times facing Excite@Home and the rest of the Internet sector.
"Despite facing a number of tough challenges, we executed solidly this quarter, posting results in line with our targets and delivering ever-higher levels of network reliability and customer satisfaction," Hart said in a statement.
The cable-modem service provider is remaking itself, steering away from its advertising-supported Internet portal and focusing heavily on its core cable-modem service. The company is working to bolster its network reliability, which has had some hiccups in the past.
The company finished June with nearly 3.7 million subscribers, a 115 percent increase from 1.7 million customers a year ago. Excite@Home added 474,000 subscribers during the second quarter. Executives expect the company to finish the year with about 4.8 million customers. Cable-modem service subscription revenue increased by 71 percent from the same period last year.
The company's cable-modem business accounts for about three-fourths of total revenue. Recent cable-modem rate increases by cable operators AT&T and others could boost Excite@Home's revenue during the second half of the year, executives said.
"We haven't really started to see a lot of that filter through yet, but I would expect to see that in the third and fourth quarter," said Chief Financial Officer Mark McEachen. "We haven't seen any falloff in subscriber growth as a result."
The primary reason for the company's wider loss this quarter, when compared with the year-ago quarter, was continued weakness in its media businesses. Revenue from Excite@Home's media businesses tumbled 62 percent from year-ago levels. The company's international revenue also slipped, though subscriber growth in Japan has been strong, executives said.
The situation with the media businesses has led many industry observers to speculate that Excite@Home may try to sell its Excite.com portal, the Blue Mountain Arts online greeting card site, or its MatchLogic ad-tracking unit.
"Clearly these (media properties) have been a disappointment," Hart said on a conference call.
Hart said Excite@Home has no intention of investing further in these "narrowband" properties, which will continue to lose money and therefore require the company to raise more money.
The company expects to improve its cash position later this year, McEachen said, by issuing new debt or selling certain business units, which the company has hinted at for months.
"We continue to see softness in the economy, particularly in the advertising area, and as a result we're looking at possible asset sales or the issuance of debt by the end of the year," he said.
Excite@Home, which secured additional financing last month, had $183.4 million in cash and marketable securities at the end of June, up from about $105 million at the end of March.
In April, the company reported a first-quarter net loss of $61.6 million, or 15 cents per share, on revenue of $142.8 million.