Excite@Home Sells Australian Unit
By Karen Brown -- Multichannel News, 9/18/2001 9:10:00 AM
Troubled Excite@Home Corp. continues to trim its operations, this time selling off its stake in its Down Under unit.
The Redwood City, Calif.-based company announced Tuesday that it sold off Excite@Home Australia to its joint-venture partner, Optus Administration Pty Ltd. At the same time, the company has forged a deal with Excite@Home Australia to provide broadband technology and brand licensing.
That follows on the heels of a similar August deal in which Dutch cable operator Essent Kabelcom bought out the remaining interest in the @Home Benelux high-speed service from Excite@Home and investor Intel Capital.
The two deals could set the stage for Excite@Home's future relationship with U.S. cable operators -- more as an Internet-service provider than an overall network owner/operator.
'What we are doing overseas is licensing our broadband technology, so this transaction sharpens that focus by discontinuing the obligations we might have had as an equity owner,' an Excite@Home spokeswoman said. 'So the sale of our equity allows us to obtain some cash in exchange for our interest, it helps to reduce overall operating costs and it allows us to focus on our core business, which is broadband.'
In a statement, Excite@Home chairman and CEO Patti Hart said the Australia deal 'is the second example of how we envision other relationships with cable operators could be structured, ultimately making Excite@Home a provider of multiple services for last-mile owners.'
Times have not been kind for Excite@Home, which posted a $65.1 million second-quarter net operating loss. Dragged down in part by sagging Internet-content properties, the company has sought to shed certain operations in the past year in order to focus on more on its core service business.
It recently sold off its BlueMountain.com electronic-greeting-card business -- which it bought in December 1999 for $780 million cash -- to American Greetings Corp. for $35 million in cash.
To further cut costs, the company has also had to endure several waves of layoffs this summer. Even so, estimates are that Excite@Home will need up to $200 million to stay afloat through 2001.
In August, Excite@Home's auditors made filings with the Securities & Exchange Commission indicating that the company's financial viability was a going concern. That prompted Promethean Investment Group LLC, which sunk $50 million in convertible debt into Excite@Home in June, to demand repayment, charging that the company's financial condition had been misrepresented. Excite@Home has challenged that action, and the two companies are now in negotiations.
Meanwhile, cable affiliates Cox Communications Inc. and Comcast Corp. have already announced that they will end their distribution agreements with Excite@Home in June 2002. Last week, Excite@Home chief financial officer Mark McEachen resigned to pursue other interests.
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