Excite@Home reports loss in line with views
In its first quarterly report since the merger, Excite@Home posts a second-quarter loss in line with consensus estimates while revenue more than doubled.
Excite@Home, the leading Net-over-cable service provider, reported a net loss of $217.9 million, or 76 cents a share, compared with a $24.8 million, or 11 cents a year ago.
Excluding acquisition, distribution, and other costs, the company's loss was $5.9 million, or 2 cents per share, in line with a consensus of 15 financial analysts as polled by First Call.
Quarterly revenue totaled $100.4 million, up from $42.2 million last year.
The company also said it had 620,000 subscribers as of June 30, in range of analysts' expectations. Road Runner, a similar cable modem service and Excite@Home's nearest challenger in terms of subscriber totals, recently announced it had reached 320,000 subscribers. Analysts estimate the entire digital subscriber line (DSL) market has fewer than 200,000 customers.
"Excite@Home and its cable partners have invested heavily in the development and deployment of the technologies necessary to spark this new wave of broadband capability. Clearly, we are now showing the results of this effort as demonstrated by the growth in homes passed and the acceptance of our service by cable modem subscribers.," Excite@Home chief executive Tom Jermoluk said in a statement.
The financial results mark the first time the two companies, which completed their $7.2 billion merger in May, have filed financial results jointly. The merger is intended to make the combined company an Internet powerhouse by melding @Home Network's high-speed Internet access product with Excite's content, search technology, and media expertise.
Wall Street expects the company to post its first profit during the fourth quarter, according to a First Call report.
While most analysts say the future continues to look bright for Excite@Home, the company has suffered a series of setbacks in recent months.
The company, along with its largest shareholder AT&T, is embroiled in a regulatory fight with Internet service providers over access to cable networks. Only two cities in the nation to date have adopted requirements forcing open access, while the Federal Communications Commission believes new laws are unnecessary. Excite@Home stands to lose its exclusive agreements with cable operators if its cable partners are forced to work with other ISPs.
Excite@Home, which markets its fast data downloads as a key selling point, has faced a backlash from some customers over a nationwide policy to limit how fast its users can upload information.
AT&T also will offer credits and months of free service for many users in Northern California after customers experienced sluggish speeds and problematic service.
Separately, stock in the company is off its April highs, although shares also split on a 2-for-1 basis in June.
Stock in Excite@Home finished 3.6 percent to 45.0625 today ahead of the earnings announcement. Shares have traded as high as 99 and as low as 11.75 in the past 52 weeks.