The company added a record number of subscribers during the quarter, which added plausibility to its ambitious year-end sub target. But finding a new CEO, and its relationship with AT&T, may have more influence on near-term perception of the company than will the details its operational performance.
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Excite@Home's pro forma loss for the quarter was $41.6 million, or $0.10 per share. That compares to a loss of $4.2 million, or $0.01 per share, in the third quarter of 1999, and a loss of $45.3 million, or $0.11 per share in the second quarter of this year. This met analyst's consensus estimates of a $0.10 per share loss. The quarter's loss excludes net expenses of nearly $628 million for distribution agreements as well the amortization of good will and other conventionally excluded expenses.
Subscriber growth
The increased losses over last year reflect, in part, Excite@Home's decision, announced at the end of this year's first quarter, to defer near-term earnings in favor of stepped-up efforts to increase high-speed subscribers and expand internationally. At that time, the @Home service had under 2 million subscribers and the company set a target of 3 million by the end of this year. With such a large slab of credibility staked that frequently reiterated target, how'd Excite@Home do on what outgoing chairman and CEO George Bell today called its "most important metric?"
During the quarter, Excite@Home added 510,000 to its subscriber base, with 95,000 of those outside North America. The company's total subscriber count grew to 2,313,000, up 28% from about 1,803,000 in the second quarter, and an increase of 174% from 843,000 subs in September 1999. The company has 59 million North American cable homes under contract. Of those, 30 million are currently upgraded and capable of offering the service.
Media growth
Though it gets less attention than subscriber growth, the company's Excite portal is also a critical piece of the equation.
User traffic across the Excite Network of properties averaged 149 million page views in September, a 9% increase from 137 million last June and a 67% increase over last year. These numbers include both narrowband and broadband users of the sites and include the company's Bluemountain and Webshots properties as well as the main Excite portal.
The Excite Network had 93 million registered users for it services in September, up 15% from 81 million last quarter and 111% compared to one year ago, the company said, and was the fifth most visited Internet destination in September, according to numbers released last week by Media Metrix (Nasdaq: JMXI).
In announcing its third quarter results, Excite@Home said it expected subscriber growth between 25% and 30% in the fourth quarter, which on the high end would put it over the 3 million mark. It also said it expects fourth-quarter losses to come in between $0.08 and $0.10 per share, somewhat more than the estimated $0.06.
However, other issues facing Excite@Home may take precedence even over those much-watched performance measures. Chairman and CEO Bell announced his resignation last month, and the company's relationship with AT&T (NYSE: T), which owns a controlling interest in the company, remains up in the air. And the nearer-term perception of Excite@Home is likely to hinge on how these and related matters are settled more than on the details of the company's operations.
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