My response: I am sorry, but I must write this. Many people see the recent AT&T (NYSE: T) news as a bummer for Excite@Home; I don't see it as having nearly such weight.
Our cable access Rule Breaker enjoyed an 11% bounce today because some concerns were lifted regarding AT&T's self-serving, cruel announcement that it will open its cable to other Internet providers in 2002. Why is AT&T doing this when it owns a big chunk of Excite@Home? Well, the company spent $120 billion on cable properties for one reason: to earn a return on the investment. One way to generate income is to open its cable to outside parties and charge them. As AT&T said, opening their cable "is just smart business."
In the wake of AT&T's announcement, Excite@Home isn't hung out to dry. The company has exclusive rights to AT&T's cable until June of 2002, plus, for three additional years after that, AT&T can't market key competing services to Excite@Home subscribers. As I posted on a Rule Breaker board last week, there are potential positives for Excite@Home behind last week's news, too:
1) Excite@Home management stated that open cable access could mean more revenue streams for the company, because many broadband Internet providers, such as MindSpring (Nasdaq: MSPG), will deliver Internet access using the @Home network, for which Excite@Home will charge.
2) Once Excite@Home's exclusive contract with AT&T expires, @Home is free to offer its services via satellite, wireless and DSL, so it probably will. In addition to the @Home TV service that launches in 2000, these new distribution channels will give the company a large footprint (or market reach).
3) Most people expect that cable operators will continue to push @Home services to consumers foremost, over any competing cable services, because @Home is the lead brand and (especially by 2002) @Home should have the most reliable and complete service.
4) Although not directly related to the Ma Bell news, the tracking stock planned for Excite.com and @Home's media properties should increase total shareholder value. @Home's Web properties receive over 100 million page views per day. The company's Excite.com property alone may generate significant extra market value when represented by a tracking stock.
Long term, I believe that this recent "open access" issue could fade from relevance, akin to the fear that free Internet service providers would crush America Online (NYSE: AOL). (AOL is valued at a new high today, above $200 billion.) Or, the importance of this topic could fade something like that May article from Barron's faded -- you know, the article about Amazon.com (Nasdaq: AMZN) being Amazon.BOMB. Amazon's stock has gained over 90% since the aftermath of that article.
But why might this cable news fade from relevance? Well, why should one company have exclusive distribution rights to the cable to begin with? Excite@Home is arguably in a position of privilege that can't last and still serve the best interests of consumers. One day, we will probably marvel that Excite@Home ever had so much cable essentially locked up for so long.
I have more thoughts on Excite@Home and on David Gardner's position regarding the stock as he voiced it during the Fool radio show this weekend. However, to keep this column moving, I posted the continuation of the ATHM topic on the Excite@Home message board.
Starbucks Gets Cookin', as does BreakerPort
Starbucks (Nasdaq: SBUX) announced an investment in Cooking.com, a leading online cookware retailer, and it made Cooking.com the exclusive provider of cookware on Starbucks.com. You can buy many cool gifts on Starbucks.com, including great collections of music. Check it out. (Iomega (NYSE: IOM) is selling directly online, too, via its new Website, iomegadirect.com.)
Starbucks isn't the only one cookin' with oil. The BreakerPort has been heated to nearly one million -- one million dollars, that is. Launched with $50,000 in August of 1994, this portfolio is growing close to a million clams. We're not about to Wisely celebrate a simple round number (unlike the hoopla for the Dow 10,000), but we won't lament this milestone, either, should it arrive. In fact, we will celebrate Foolishness, taking control of one's finances, and investing in stocks for the long term.
Speaking of investing, please consider giving what you can to Fool Charities. These are charities that Fool community members, perhaps you included, helped target as great causes. If you cannot give with dollars, post on the Fool message boards instead. There are hundreds of topics that may interest or benefit you, and right now every post that you make results in a two cent donation to charity from The Motley Fool. With millions of Fools, that adds up.
Have a great night. And please visit the RB boards linked below if you want to talk about anything.
--Jeff Fischer, TMF Jeff on the Fool boards.
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