Struggling At Home Corp., best known for its Excite@Home brand, suffered its second major setback this week as cable system owners Cox Communications Inc. and Comcast Cable Communications Inc. notified the company that they will terminate their distribution agreements, effective June 4, 2002.
At Home operates a cable modem network that serves some 3.6 million residential users. If Cox and Comcast follow through on their planned termination, At Home will be left with only one major cable partner, AT&T Corp. AT&T owns a controlling interest in At Home, with a 23 per cent ownership stake and a 74 per cent voting interest.
Comcast Cable decided to exercise the exit provision in its contract “in light of the recent published reports regarding Excite@Home’s financial condition,” said President Steve Burke via a spokeswoman, in a prepared statement. “We have been and continue to be in discussions with Excite@Home about how we might structure a different relationship. That being said, we will have 950,000 customers by year’s end, and we need to insure that they continue to be well served.”
The spokeswoman declined further comment on the termination.
Cox had been in discussions with At Home for several months about assuming greater control over the Cox@Home broadband service, according to spokeswoman Laura Oberhelman. At Home’s mounting problems “simply accelerated” those plans, she said.
Cox currently has 484,000 residential broadband customers, and is in trials with America Online Inc. (part of AOL Time Warner Inc.) and EarthLink Inc. to test those companies’ high-speed Internet services. Cox’s arrangement with At Home is exclusive through the end of 2001, but early next year the company would like to begin offering its customers a choice of ISPs (Internet service providers), Oberhelman said.
At Home has been struggling with large losses and a mountain of debt. The company recently fired its auditors, Ernst & Young LLP, after the firm expressed doubts about At Home’s survival. At Home maintains that its change in auditors was unrelated to Ernst & Young’s grim evaluation.
At Home said Monday that it is facing a Friday deadline for a US$50 million payment to Promethean Investment Group LLC, which manages two funds that invested in At Home earlier this year. Promethean maintains that At Home has breached some terms of those investments; At Home disputes that claim and said it won’t pay the $50 million.
At Home had $154.28 million in cash and cash equivalents on hand as of June 30, the end of its most recent fiscal quarter.
Separately, At Home said it plans to retain an investment banking firm to assist the company in restructuring and “exploring its options.” Those options are likely to include a sale of the company’s Excite.com portal, if a buyer can be found for the money-gobbling site. At Home said earlier this year that it intends to exit all businesses that don’t support its sale of broadband services.
At Home’s shares were down 23.1 per cent, at $0.40, in afternoon trading on the Nasdaq exchange.
At Home Corp., in Redwood City, Calif. can be reached at http://www.home.net/.
