At Home Not for Faint-of-Heart


There are signs that the Wall Street joyride of At Home
Corp. might be nearing an end.

Or, the news early last Friday that the Redwood City,
Calif.-based parent of high-speed Internet-access service @Home Network is teaming up with
RealNetworks Inc. on streaming might give the high-flying company new life.

Shares of the company have nearly tripled in the past three
months, fueled by the frenzy surrounding Internet stocks. At Home, traded
over-the-counter, jumped from $41.50 per share Oct. 4 to $121 Jan. 11.

However, like many Internet stocks, At Home is no stranger
to volatility. The day after it reached $121 per share, its stock plummeted by more than
17 percent, closing Jan. 12 at $100. On Jan. 13, while other Internet stocks took huge
hits, At Home opened at $80.625 and rallied to close at $105.75.

After declining again last Thursday, it opened up $2.87, to
$105.50, last Friday morning, following the RN news. Obviously, this stock is not for the

Analyst Lou Kerner of Goldman Sachs & Co. said the
recent uptick in At Home's stock is an indication that the market is recognizing the
fact that broadband is the technology of the future.

"There is little doubt that At Home is one of the
purest plays," Kerner said. "They have investors that are less value-focused
than thematically focused. The company has a tremendous asset in its affiliation with
close to 60 million American homes."

And it is that affiliation -- through the cable operators
that own At Home in partnership -- that will help to push deployment of the company's
services to consumers, Kerner said.

In a period when analysts expect high-speed-data services
to begin a rapid scaling of subscribers, Kerner said, "The company appears to be on
track -- it is exceeding expectations."

But one analyst believes that those investors may be in for
a surprise.

In a report issued last week, Ted Henderson, an analyst
with Englewood, Colo.-based investment bank Janco Partners, said that in order to justify
trading in the $121-per-share range, At Home will have to sign on an additional 1 million
subscribers each quarter for the next 16 consecutive quarters. The company currently has
330,000 subscribers.

"Going from 330,000 subscribers to 10 million to 11
million subscribers in four to five years -- that's a monster from a funding
standpoint," Henderson said. "This is the year when they face real scrutiny in
their deployment plans."

Henderson also downgraded his outlook on At Home from
"buy" to "market perform." Although that move tends to send a sell
signal to investors, Henderson said that is not what he recommends. His decision to
downgrade the stock was based on concerns about deployment execution and regulatory

"We love [At Home's] position in the long term.
Their management is dong a fabulous job, and we recognize that their subscriber targets
have ramped up very quickly," Henderson said. "We basically issued a caution.
There are some regulatory and execution risks. We made the point that these things could
be amplified."

Henderson fears that regulatory scrutiny could increase
after the proposed merger between AT&T Corp. and Tele-Communications Inc. receives
federal approval. After that happens, he said, telcos and other competitors could step up
their anti-cable lobbying efforts.

On the execution side, he added that there is still some
uncertainty as to whether MSOs will begin widely selling existing cable modems through
retail channels this year, or whether they will wait for equipment incorporating the
DOCSIS 1.1 (Data Over Cable Service Interface Specification) standard to be introduced.

Matt Wolfrom, a spokesman for At Home, declined to comment
on the stock performance, citing company policy.

Although At Home's stock has been on a wild ride these
past few months, Henderson does not believe that it is overvalued.

"We don't see the stock going back to $40,"
Henderson said. "We issued our caution at $80 or $90, and we didn't say that it
was overvalued. What we saw [Jan. 13] should indicate real support for this thing in the

But while At Home seems to be riding the growth wave of
Internet and cable stocks, one major player appears to have been unaffected -- Road
Runner, which is owned by Time Warner Cable and MediaOne Group Inc.

Granted, Road Runner is about one-half the size of At Home
in terms of homes passed, but some analysts wondered why parent company Time Warner
Inc.'s stock hasn't been as affected by the Internet frenzy as others.

The easy explanation is that Time Warner is a vast media
company with several different components, including cable systems, publishing, cable
networks, film production and distribution. It is not strictly a high-speed Internet
company, like At Home. And separating out the Road Runner component, some said, is an
unnecessary and impossible task.

Still, others wondered why Road Runner hasn't been
figured into Time Warner's market capitalization, which currently stands at about $74
billion. At Home's market capitalization is around $15 billion.

"Cable stocks haven't had the same run as the
Internet," said Jessica Reif Cohen, an analyst with Merrill Lynch & Co. "We
have tried to give [Road Runner] a value. Our price objective [for Time Warner] is $75
[per share], and the stock is $60."

Christopher Dixon, an analyst with PaineWebber Inc., said
it is only a matter of time before Time Warner's share price begins to reflect the
potential of the Road Runner service.

"It's as inevitable as water running downhill
that investors will recognize the fact that the major media players will reap significant
benefits from the Internet," Dixon said.

However, Dixon added that Time Warner's stock has too
many shares outstanding to be subject to the volatility of many Internet companies.