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@Home beats estimates of a loss

@Home Network, in its first report since going public, posted a narrowed loss over the previous quarter and beat Wall Street's estimates of a loss.

@Home Network (ATHM) today reported a loss of $11.9 million, or 10 cents per share, for the third quarter ended September 30, compared with a loss of $7.2 million, or 7 cents per share, last year.

The company narrowed its loss over the previous quarter's 11-cents-per-share loss, and beat Wall Street's estimates of a loss of 11 cents as well, according to First Call.

@Home posted revenues of $1.9 million for the quarter, up from $141,000 a year ago. The company also reported an 87 percent increase in revenues over the second quarter.

Since the company's July 11 initial public offering, investors have buoyed @Home's stock, which opened at 24-7/8 after the company priced it at $10.50 a share. It reached a high on October 6 of 30-5/8.

The company currently has 26,000 cable-modem subscribers across the United States and Canada, on a base of 2.7 million homes with potential access to a two-way cable connection. That's up from 12,000 subscribers when the company went public.

Analysts have praised @Home for its potential to solve the Internet's bandwidth problems and sign on millions of users within a few years. One obstacle facing the company, however, is the process of upgrading the cable network to handle the Internet's two-way data exchange. As that upgrade progresses, so should @Home's business.

"We think ATHM is uniquely positioned as the emerging leader in the deployment of Internet access (primarily to consumers) via cable modems," said a report from Morgan Stanley and Dean Witter. "We think it has the potential to be one of the biggest beneficiaries of the rapid growth in Internet usage." The report rated @Home's stock "outperform."

But a report from Merrill Lynch dismissed the importance of the company's operating results and predicted a loss of 11 cents for the quarter. "The key metrics to focus on should be upgraded homes passed and subscribers," it said.

@Home early this month announced an alliance with Cablevision Systems to deliver high-speed Internet access to a potential 5.5 million homes in the Northeast. Including other agreements, @Home expects to have access to about 50 million homes.

As part of the deal, Cablevision received a warrant to buy 11 million shares of @Home's stock at 50 cents per share, equal to an 8 percent stake if exercised today. In return, Cablevision agreed to make its cable systems available to @Home on an exclusive basis. Cablevision joins Tele-Communications (with a 39.5 percent stake), Comcast (12.4 percent), and Cox Communications (12.4 percent) as @Home cable partners. Venture capital firm Kleiner Perkins Caufield & Byers holds a 11.3 percent stake.