Good day, Fools. Many of you saw yesterday how favorably the market responded to's (Nasdaq: AMZN) third-quarter report. Those who acted on my column last week, in which I made the argument for shorting Amazon, felt that gain personally. Amazon is up over 50% since my story was published.

Ooops. Um, did I say that Amazon is volatile? I meant to. It's a good example of the potential pain of shorting and the riskiness of taking positions in individual stocks. And of the potential pitfalls of mimicking us.

But I digress. Most of you probably didn't see the market's reaction to Excite@Home's (Nasdaq: ATHM) third quarter. It was quite positive at first, with the stock rising over 5% in the morning, before everyone realized that the market was tanking and bailed, dropping it 5% lower than the previous day's close. Portrait of an efficient market at work.

So, aimless trading volatility aside, how were the results for the third quarter? Allow me to take a shot at them. After the second quarter, as an  Excite@Home shareholder bubbling with frustration, I spewed a parody-cum-rant after listening to the conference call. This time I'm calmer, ready to do a little more quantitative analysis.

@Home, even before the Excite merger, has emphasized subscriber numbers. Chairman and soon-to-be-former CEO George Bell said in the call that it's "the metric that you have told us is the bellwether of our franchise." (I love that transference of opinion. Hey, he's just telling us because we keep emphasizing it. George should run for public office after they find a replacement CEO.)

Sub numbers were great, coincidentally: 510,000 new people ordered cable broadband services from Excite@Home in the third quarter. Well, 60,000 of those came through an acquisition by a joint venture, but the number still beat the company's estimate. That puts total subs at 2,313,000 -- about 28% higher than the previous quarter. To reach the target of 3 million by the end of the year, the company just needs to boost it another 30%. With the new self-install kits available in Radio Shack, that should be doable.

(I still don't understand why anyone would buy one of these, by the way. Management made a good argument for why the company would like it, since it means that the customer and not a paid technician will do most of the work. Still, why would I pay to do myself what someone from the company would do for free? But I digress again.)

Subscribers vs. Revenue
It was somewhat surprising, however, that revenue did not rise accordingly. Pro forma revenue rose only 8% sequentially to $170 million -- substantially below the last estimate I saw, $200 million, from both Prudential and Jefferies & Co. Those reports came out in late June, so they're a bit dated, but I hadn't heard any subsequent warnings. Pro forma net income of $0.10 per share was in line with estimates.

What's the problem here? One problem is that media revenues weren't very good -- again -- growing 4% sequentially and only 22% year-over-year, while total revenue was up 51% year-over-year. Nico Detourn has made the argument before that media revenues have not kept up with subscriber revenues. Let's look at her metrics -- sub revenue per sub (SR/S) and media revenue per sub (MR/S) -- for the latest quarter. I'll update her numbers, since hers didn't include international revenues in each segment.

               2000Q3 2000Q2 2000Q1 1999Q4 1999Q3
Subs (thou)      2313   1803   1500   1150    843
Seq. growth       28%    20%    30%    36%    36%
Sub Rev ($thou) 78000  67795  56723  46553  36952
MediaRev($thou) 92000  80926  81340  82200  75610
SR/S           $33.72  37.60  37.82  40.48  43.83
Seq. growth -10% -1% -7% -8% N/A MR/S $39.78 44.88 54.23 71.48 89.69
Seq. growth -11% -17% -24% -20% N/A

Not only is media revenue falling rapidly relative to subscriber numbers, but subscriber revenue is straggling, too. The situation is even worse domestically. Subscription revenue per domestic sub was $32.17 in Q3.