Excite@Home renegotiates with AT&T

Separately, the company said during a conference call that it has extended talks with partners Cox Communications and Comcast to continue exploring marketing options for the Excite@Home service with the cable providers. Their formerly exclusive agreements will expire Dec. 4, but Excite@Home executives said they expect to come to a new agreement over the next few weeks.

Excite@Home revised an existing agreement with majority shareholder AT&T so it can lease access to the backbone network. Excite@Home will pay $8.8 million annually for the next 18 years for access to the network.

Tuesday's deal, coupled with the $100 million Excite@Home recently raised in convertible secured notes, helps temper the company's cash crunch. The cable access provider previously said it needed an additional $75 million to $80 million to continue operations through the end of the year.

"I'm confident that we are headed in the right direction, building a strong independent company with a bright future based on the assumption of broadband growth," Excite@Home Chief Executive Patti Hart said on the conference call.

Excite@Home has extended talks with cable partners Cox and Comcast to continue working with the cable modem service. All three companies are preparing for an era in which Excite@Home is not the exclusive provider of broadband Net access to Cox and Comcast.

Executives also said the company is comfortable with its previous guidance for the second-quarter financial results, which will be "consistent within our guidance of a 16- to 17-cent (earnings per share) loss," Chief Financial Officer Mark McEachen said.

The company continues to expect to have a break-even third quarter on an EBITDA (earnings before interest, taxes, depreciation and ammortization) basis, executives said.

Stock in the company plunged earlier in the day. Shares closed down 32 cents, or more than 14 percent, to a new 52-week low of $1.90. Earlier shares touched $1.52.

The company revealed in regulatory documents Monday that it is seeking approval from shareholders to authorize its board of directors to offer a reverse stock split. Excite@Home, whose board already has approved the proposal, is considering splits of one share for every two shares, or 1-for-3 or even 1-for-4.

Executives on Tuesday said the company has not yet decided to offer a reverse stock split, but is considering it and is seeking shareholder approval.

"We want to give the board the authority to expeditiously act if we feel like we need this as a tool," Hart said.

The proposed reverse stock split would not occur based on automatic triggers. Executives also said the Nasdaq hasn't alerted the company that it is in danger of being delisted.

In documents filed with the U.S. Securities and Exchange Commission, Excite@Home said it would seek a reverse stock split to boost its share price and continue trading on the Nasdaq stock market. The Nasdaq, as is its policy, has recently removed many Internet-related concerns that have fallen below $1 per share for an extended period of time.

In a reverse stock split, shareholders receive less stock than they currently hold, but a smaller pool of shares means a higher per-share price.

The reverse stock split and conference call come amid speculation about the future of the one-time Internet front-runner. Created by the merger of cable modem service @Home Network and narrowband Web portal Excite, the combined Excite@Home has faced tough times almost since the marriage was finalized.

The company has seen its stock price plummet, many top executives have left, and the company has been forced to lay off hundreds of workers and close some of its European operations and is now seeking additional funding. The company also has said it would consider selling some of its narrowband media assets that have struggled to generate revenue amid a poor online advertising market.

"We will continue to entertain and review responsible offers," Hart said. But executives said the company believes its media properties continue to have value, and the company is proceeding with a strategy to integrate them short of a sale. "We're working toward leveraging those assets in the void of a transaction that we could be comfortable with," she said.

Rumors have circulated in recent months that Excite@Home retained investment bank Morgan Stanley to consider its strategic options for parting with certain media properties.

Excite@Home earlier this month raised $100 million in convertible secured notes, continued talks with AT&T to revise its network deal, and closed its French, German and Spanish media operations.