Excite Posts Narrower Net Loss, Still Needs Funding

REDWOOD CITY, Calif. — Excite at Home Corp. reported a smaller second-quarter net loss, but said it needs additional funding before the end of the year.

The Internet-service provider posted a net loss of $346.3 million, or 85 cents a share, compared with year-earlier net income of $668.3 million, or $1.69 a share. Excluding acquisition- and restructuring-related expenses, Excite said it would have lost $65.1 million, or 16 cents a share, compared with a year-earlier loss from operations of $38.6 million, or 10 cents a share.

Revenue slipped 6.8% to $138.6 million. The drop “was driven by a decline in media and advertising revenues, which was partially offset by strong growth in residential broadband-subscription revenues,” the company said in a prepared statement.

When the firm released its first-quarter results in April, Excite warned it should post second-quarter revenue similar to the first quarter’s $142.8 million and a loss from operations of 16 cents to 17 cents a share because of “higher net interest expense driven by increased leasing of capital equipment and lower other income from portfolio gains.” At the time, the mean estimate of analysts surveyed by Thomson Financial/First Call was for a loss of 10 cents a share.

Excite added 474,000 broadband subscribers in the second quarter, putting the world-wide figure at 3.7 million, more than double the year earlier’s 1.7 million and above the company’s target of 3.6 million.

Cash and marketable securities totaled $183.4 million as of June 30, compared with $104.5 million as of March 31. The gain was a result of Excite getting a combined $185 million through the sale of convertible notes and restructuring its optical-fiber-backbone agreement with controlling shareholder AT&T Corp.

Excite added it is still pursuing its options to “reduce its financial exposure to narrowband media operations, which continue to generate financial losses for the company.” The company announced in April that its media business was performing below Excite’s expectations and that it might consider selling certain media assets to raise much-needed cash.

Excite said Monday it “will need to raise additional funds before the end of 2001 to support its operations. Potential sources of additional funds may include sales of certain of the company’s media operations and financing transactions. If the company is unsuccessful at raising sufficient funds or sufficiently reducing expenses, this could have a material adverse impact on its operations and liquidity.”

“We are working quickly to reshape our company in order to lead the next phase of the growth in broadband,” Chairman and Chief Executive Patti Hart said. “We are unique in our ability to deliver highly reliable broadband network services and applications, and we are focused on leveraging these capabilities to deliver a wider array of services to a broader set of customers.”

In an interview with Dow Jones Newswires, she said Excite wasn’t projecting earnings and revenue for the rest of 2001 because “we wanted to shore up the guidance we’ve already given.” Ms. Hart said the company expects to post earnings before interest, taxes, depreciation and amortization, or Ebitda, in the fourth quarter. But she backed off previous forecasts that Excite would hit break-even Ebitda in the third quarter.

“I think uncertainty around the media market continues to impact that,” she said about the earlier third-quarter target. “It’s the media uncertainty that has us saying we’re comfortable exiting the end of the year with positive Ebitda.”

Copyright (c) 2001 Dow Jones & Company, Inc.