E@H Reports Great Gains

Subscribers are up, revenues are up. Life is so good @Home that its CEO decides to spend more time there ... At home that is.

by Jim Wagner of internetnews.com [October 25, 2000]

It came as no surprise that Excite @Home reported third quarter increases in subscribers and revenues at its press conference Tuesday night.

What came as a surprise was the announcement it was looking for a new chief executive officer.

George Bell, Excite@Home (NASDAQ:ATHM) chairman and current chief executive officer, said he will remain as acting CEO until the end of 2001, but wants to start the search for a replacement now.

Subscribers up, corporate leader out
"It's become increasingly apparent that we need two people here," Bell said. "A chairman, to work with issues like our cable partners and strategy, and a CEO to handle the day-to-day operations. We've grown to be one of the largest broadband providers in the world, and as such, we wanted to make the announcement public, in the light of day, instead of having it leaked to the press.

"We've hired a search firm to find somebody," Bell continued. "Obviously, we want to get a great person in here, (but) time is a secondary issue."

The broadband Internet service provider's search for a CEO is made easier with the strong numbers reported in the third quarter. It's clear Bell's replacement won't have to take over a sinking ship, as is the case with many dot-com companies this year.

Demand for broadband strong
Excite@Home's pro forma revenues increased 51 percent to $169 million from third quarter 1999, an eight percent increase since the second quarter 2000.

In nearly three months time, the cable Internet service provider has garnered an astonishing 510,000 new subscribers in nearly three months, from more than 1.8 million June 30 to 2.3 million Sept. 30.

Bell cites reports of the nation's increased demand for broadband Internet access, growing from just one percent of total Internet users connected to high-speed access last year to 42 percent this year. And, Bell said, 55 percent of those who are signed up now for broadband refuse to ever return to dial up access again.

Mark McEachen, Excite@Home executive vice president and chief financial officer, credits @Home's high subscriber rates to the cable affiliates in the local markets.

"Our cable affiliates are aggressively marketing @Home's Internet offerings," McEachen said. "As such, we have 7.17 percent market penetration in homes in North America, with 510,000 new subscribers in the third quarter, up 28 percent overall and an increase of 60 percent of new customers generated in the second quarter."

McEachen also announced the company's agreement with Radio Shack to market its "truckless" cable install by the end of the month.

"Now, all a customer has to do is go to Radio Shack, where a sales representative will take their phone number to see if they qualify for cable Internet," McEachen said. "All the customer has to do is plug in the equipment, install the CD and make one phone call to the local cable company to start the service. The only reason a technician would need to come out to the house would be to install a cable jack or filters."

Goal is to get sticky
As the company continues to get new customers, Bell said, Excite@Home needs to work to ensure that its current customers stay with his company.

Officials said @Home's 2.3 million customers are seeing as much content as 12 million of America Online, Inc.'s subscribers. With broadband customers 38 percent more likely than dial up customers to make a purchase online, the key is to get content to the customers.

McEachen reported 1,400 new commercial accounts from businesses who provide content for their clients. That, and the completion of its acquisition of Pogo.com in the fourth quarter, will bring a lot of new content to @Home customers.

"We will do whatever it takes to be the leader in broadband content, whether by buying or building out," McEachen said.

Advertising revenues also saw an increase in the third quarter, despite the soft advertising market. That shouldn't be a problem for his company, McEachen said.

"As you will agree, the market is soft as advertisers assess their strategies," McEachen said. "As Fortune 500 companies increasingly look to ramp up their online advertising efforts, they will look to our broadband network to deliver their message."

—End