Excite@Home Reports Fourth Quarter and Fiscal Year 1999 Results
Cable Modem Subscribers Hit 1.15 Million
Pro Forma Revenues Grew 76% to $129 Million
Profitability Achieved
REDWOOD CITY, Calif., Jan. 20 /PRNewswire/ -- Excite@Home (Nasdaq: ATHM), the leader in broadband, today reported fourth quarter 1999 revenues of $128.8 million, an increase of 76% compared to pro forma revenues of $73.3 million in the fourth quarter of 1998. Pro forma results combine the historical results of Excite Inc. and At Home Corp., which merged on May 28, 1999. For the full year, pro forma revenues increased 107% to $420.5 million.
Excite@Home achieved a long-standing goal in the fourth quarter by delivering, on schedule, its first quarter of reported profitability on a pro forma basis. Pro forma income was $514,000, or $0.00 per share, compared to a loss of $4.5 million, or $0.01 per share, in the fourth quarter of 1998. Pro forma loss for the year was $14.6 million, or $0.04 per share, compared to a loss of $46.7 million, or $0.14 per share, for 1998. Pro forma income for the quarter and loss for the year exclude net expenses of $723.5 million and $1,481.7 million, respectively, for the amortization of goodwill and other intangible assets created by the merger of Excite and At Home, as well as the cost and amortization of distribution agreements and certain other non-operational gains and expenses. The as-reported net loss for the quarter was $723.0 million, or $1.93 per share, compared to a net loss of $64.9 million, or $0.28 per share, for the fourth quarter of 1998. For the full year, the as-reported net loss was $1,457.6 million or $4.61 per share, compared to a net loss of $144.2 million or $0.63 per share in 1998.
Excite@Home also announced the promotion of president George Bell to the additional post of chief executive officer. Tom Jermoluk will continue in his role as chairman of the board. "George joined a small search engine start-up and turned it into one of the top five sites on the Web. Thanks in large part to George's leadership, we successfully completed one of the largest Internet mergers in history, ending 1999 by exceeding expectations for broadband subscriber growth, delivering the highest network reach in our history, and delivering positive operating earnings and cash flow," said Jermoluk. "From the beginning, we have combined broadband content and high-speed access to offer our customers a superior online experience. This strategy has been validated not only by the current direction of the market, but also by the tremendous success of the @Home service. I will continue to focus my efforts on creating more ways for Excite@Home to bring broadband services to consumers."
Commenting on the quarter, Bell added, "We achieved profitability for the first time this quarter, and we now are poised to drive broadband growth more aggressively than ever. We more than tripled our broadband customer base in 1999, surpassing our first million subscribers. With the progress that we and our partners have made in reducing installation time and in expanding the online marketing, retail and OEM channels, we expect 2000 to be the year of broadband. We also have expanded our service and content offerings with the acquisition of bluemountain.com and reclaimed "Top Five" status among web media networks. Our MatchLogic digital media and ad targeting efforts continue to be a highly efficient driver of broadband subscriber growth while our new free ISP service, shows early signs of generating many more online marketing leads and expanding the reach of our web network."
The company also announced the promotions of four key executives to new positions. Ken Goldman, senior vice president and chief financial officer, and John O'Farrell, senior vice president, international, each have been promoted to the level of executive vice president. David Pine, vice president and general counsel, and Leilani Gayles, vice president, human resources, each have been promoted to the level of senior vice president.
Broadband Subscription Services
@Home Consumer Broadband Service
Excite@Home had approximately 1,150,000 subscribers at the end of 1999, up 36% from the third quarter and more than three times the subscribers at the end of 1998. Excite@Home's addressable broadband market grew to approximately 24 million upgraded cable homes worldwide, up from 13 million a year ago, representing about one-third of its global homes under contract and about 40% of its North American footprint. About 15 million new homes were added in 1999, bringing the total number of homes under contract to 72 million worldwide. Subscriber penetration of upgraded homes was 4.8% at the end of 1999, nearly twice the level from a year ago despite the rapid growth in the upgraded footprint. These numbers include Internet access subscribers served by Excite@Home affiliates that are currently being converted to the @Home service, as well these affiliates' upgraded homes passed.
Excite@Home finished the year with 13M homes under contract outside of North America, accounting for nearly 20% of the Company's worldwide footprint. Eleven million of these homes were added in 1999 alone. These homes are under seven-year exclusive agreements and represent a presence in five countries: Belgium, the Netherlands, Germany, Australia and Japan. @Home Nederland commercially launched during the second quarter of 1999 and @Home Australia in December of 1999.
Retail and OEM sales channels continued to grow as a source of new subscribers to the @Home service. The @Home service became available in more than 200 new retail outlets during the fourth quarter, and is now available in a total of 770 retail outlets in North America. Retail partners in the U.S. include CompUSA, Circuit City, Office Depot, Staples and The Good Guys!, and in Canada include Radio Shack, Business Depot, Cantel mall stores, Future Shop and IBM Home Computing Stores. Excite@Home also has OEM distribution deals with Dell, Compaq and Hewlett-Packard, makers of more than 60% of the home computers sold in the U.S. today. These relationships allow customers to purchase DOCSIS cable modems along with their computers, to order computers pre-configured for the @Home service, and to schedule @Home installation appointments as they order their PCs.
Online marketing continued as a significant contributor to subscriber growth. During the quarter, Excite@Home launched a new online sales service that allows potential customers to enter their ZIP code to find out if their local cable plant has been upgraded to receive the @Home service. The system also allows users to view local pricing information, choose a preferred e-mail address and schedule an installation appointment. Through this and other low-cost online marketing efforts such as targeted e-mails sent by MatchLogic, Excite@Home increased sales leads to its cable partners by 30% in the fourth quarter compared to the third quarter while sustaining response rates of about five percent.
@Work Business-to-Business Services
The @Work division offers business customers high-speed Internet connectivity, website and e-commerce hosting. Over 5,100 businesses now use @Work high-speed access services, an increase of more than 20% from the third quarter of 1999. Through the acquisition and integration of iMall (now Excite@Home eBusiness Services) and a partnership with First Data Merchant Services, @Work is providing a complete e-commerce solution that enabled 2,000 new merchants to quickly develop online storefronts with complete payment gateway and shopping cart functionality during the fourth quarter (http://www.excite.com/storebuilder). Participating merchants are listed with Excite Stores (http://www.excitestores.com), driving traffic to their businesses and providing Excite users a more robust shopping environment.
Media and Marketing Services
Excite Network Traffic Growth
Traffic on the Excite Network rose to 123 million average daily page views in December, an increase of 38% over September 1999 and more than double the traffic of December 1998. This includes the results of bluemountain.com for the entire month of December 1999. The Excite Network is now among the top five web media networks with approximately 28 million unique users, reaching 42.5% of all web users in December according to Media Metrix.
Registered users of the Excite Network grew to 51 million from 44 million in the prior quarter and increased 150% in 1999, excluding users of bluemountain.com. Excite@Home remains a leader in personalized content, with 43% of registered users having personalized a My Excite Start Page, a major driver of user loyalty and repeat visits.
Bluemountain.com was a major contributor to growth in Excite Network traffic in December. Bluemountain.com customers sent nearly 130 million electronic greeting cards in the fourth quarter, more than were sent in all of 1998, while total cards sent in 1999 more than tripled over 1998. Usage rose dramatically during the holiday season, with cards sent in December more than doubling over November. Excite@Home has already begun to monetize bluemountain.com traffic, with banner ads now placed on approximately one-fifth of bluemountain.com pages with a strong focus on addressing the gift-giving opportunities associated with greeting cards.
Digital Photo Strategy
Excite@Home has launched a multi-part strategy designed to capture the growth of online digital photography applications. Through an alliance with Hewlett-Packard, the Excite Photo Center (http://photocenter.excite.com) offers consumers the ability to upload, store and share digital photographs using HP's Cartogra digital-imaging infrastructure. Through the acquisition of webshots.com, Excite Photo Center also now offers thousands of downloadable digital images that can be used as screen savers and PC wallpaper backgrounds. Excite's Webshots.com is the most popular photo destination on the web, with 30 million monthly photo downloads in the fourth quarter. The Excite Webshots client software is the second-most popular download software on the web according to download.com, with over 200,000 downloads per week in the fourth quarter and nearly eight million downloads since inception.
Digital Marketing Services
Excite@Home remains a leader in providing targeted online marketing services to advertisers. MatchLogic, the Company's advertising services subsidiary, uses its database of 72 million user profiles to serve highly targeted banner advertisements within and outside the Excite Network. MatchLogic delivered over 15 billion ad impressions during the fourth quarter, an increase of nearly 60% over the third quarter, including ad banners being served onto bluemountain.com, webshots.com and other new member properties of the Excite Network. MatchLogic's industry-leading database of opt-in e-mail profiles increased in size by 23% during the quarter to 9.5 million profiles. Using this database, MatchLogic delivered over 50 million targeted e-mail advertisements in the fourth quarter.
The Leader in Broadband
Excite@Home continued to extend online content to new devices with significant progress in advanced television, wireless and online gaming services. At the Western Cable Show in December, Excite@Home announced advanced TV technology relationships with Microsoft and Liberate, two of the leaders in the development of operating systems and client and server software for advanced TV services. Cox Communications, one of Excite@Home's principal cable partners, announced plans to deploy a trial of Excite@Home's advanced TV services this year.
Excite@Home continued to build its leadership in providing content to users of wireless devices. AT&T; and Excite@Home announced plans to distribute Excite content through the AT&T; PocketNet wireless data service. Excite will be a menu option on the PocketNet phone, allowing users to view Excite content such as personalized stock portfolios, news, weather and sports, in addition to Excite Planner information and Excite Inbox, the Company's integrated e-mail, fax and voicemail service. In addition, this month Excite UK launched a WAP (Wireless Application Protocol) service that allows users to access a version of their My Excite Start Page. Customers who have WAP-enabled cellular phones can now access personalized services such as stock quotes, news, weather, TV and movie listings and sports scores in a market where approximately 40% of the population owns cellular phones.
During the fourth quarter, Excite@Home and Sega announced a partnership making Excite the exclusive portal partner for the Sega Dreamcast Network. Users of Dreamcast will receive Excite content and communications applications in addition to gaming content developed by Sega and IGN.com, and will enjoy an Excite-branded user interface customized for the needs of the television medium and the Dreamcast browser. The 128-bit Dreamcast system has sold over one million units in North America and is the first unit with full Internet functionality.
About Excite@Home
Excite@Home, the leader in broadband, offers media services through the Excite Network (www.excite.com, www.bluemountain.com and other properties), and broadband subscription services through @Home (www.home.com) and @Work (www.work.home.net). The company has a worldwide footprint of 72 million cable homes under long-term contract. Excite@Home's MatchLogic division (www.matchlogic.com) offers marketers industry-leading digital advertising capabilities including rich media production, ad and email services, and database analysis all integrated into a complete solutions package.
Excite@Home, @Home, @Work, Excite, Blue Mountain, iMall, the stylized "@" logo and MatchLogic are trademarks of or licensed to At Home Corporation and may be registered in certain jurisdictions. All other brand names are trademarks of their respective owners.
This press release contains forward-looking statements that involve risks and uncertainties, including those relating to the Company's ability to grow its subscriber and advertiser bases for its subscription broadband service, its ability to grow its users and advertising bases for its narrowband web sites and services, the timing for introducing new services; the degree of acceptance of rich-media advertising; the degree of acceptance of the Company's digital photo strategy; the Company's partnerships with regard to advanced TV development; and the Company's ability to achieve its key milestones, including obtaining its ongoing revenue targets and broadband subscribers milestones. Actual results may differ materially due to a number of factors, including the increasingly competitive environment for Internet advertising sales and e-commerce services; the Company's dependence on third parties for technology and content; the Company's dependence on the actions of its cable partners to upgrade the cable plant and market and install the @Home service; the Company's ability to successfully develop technology with its development partners; the Company's ability to successfully integrate its acquired companies; the Company's ability to successfully expand its online marketing programs and retail and direct distribution programs; the Company's ability to successfully manage and expand its free ISP offering; the Company's ability to successfully execute its digital photo strategy; the Company's ability to continue to achieve revenue per page view and revenue per point of reach goals; and the early stage of development and unproven market for devices other than the PC for delivery of Internet content. In addition, certain transactions described in this press release are contingent upon the parties' success in executing definitive agreements and/or obtaining corporate approvals, and there can be no assurance that such transactions will be completed. Reported results should not be considered as an indication of future performance. The matters discussed in this press release also involve risks and uncertainties described in Excite@Home's filings with the Securities and Exchange Commission. Excite@Home assumes no obligation to update the forward-looking information contained in this press release.
NOTE: The results for all periods presented have been restated to reflect the pro forma combined operations of At Home and Excite. At Home's acquisition of Excite was completed during the quarter ending June 30, 1999 and was accounted for as a purchase.
AT HOME CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
(In thousands, except per share data)
Three Months Three Months Year
Ended Dec. 31, Ended Sept. 30, Ended Dec. 31,
1999 1998 1999 1999 1998
Revenues(1) $128,753 $73,332 $112,562 $420,495 $203,405
Costs and expenses:
Operating
costs 50,112 25,292 45,260 162,147 76,451
Product
development and
engineering 20,223 12,820 16,834 67,939 46,566
Sales and
marketing 49,596 33,237 48,179 175,543 102,888
General and
administrative 10,722 9,143 9,028 39,063 29,361
Total costs
and
expenses(2) 130,653 80,492 119,301 444,692 255,266
Loss from
operations (1,900) (7,160) (6,739) (24,197) (51,861)
Interest income,
net 2,414 2,701 2,556 9,574 5,176
Pro forma net
income (loss) $514 $(4,459) $(4,183) $(14,623) $(46,685)
Pro forma net
income (loss)
per share
- basic $0.00 $(0.01) $(0.01) $(0.04) $(0.14)
Pro forma net
income per
share
- diluted $0.00 n/a n/a n/a n/a
Shares used
in per share
pro forma
calculation
- basic 374,758 350,820 362,885 362,238 343,918
Shares used
in per share
pro forma
calculation
- diluted 438,772 n/a n/a n/a n/a
(1) Revenue from
related
parties $7,500 $9,672 $8,916 $35,911 $18,758
(2) Depreciation
and amortization
included in
costs and
expenses $17,904 $8,940 $15,293 $58,227 $28,473
Note: The above unaudited pro forma condensed consolidated statements of
operations exclude the effects of the following:
-- Amounts earned in connection with strategic investments ($12,566
during the year ended December 31, 1999).
-- Equity losses primarily from affiliated companies acquired in
the Excite purchase ($2,876 and $5,956 during the quarters ended
September 30 and December 31, 1999, respectively, and a total
of $10,394 during the
year ended December 31, 1999).
-- Cost and amortization of distribution agreements issued to various
cable partners in connection with their roll-out of the @Home
service ($43,932 and $219,200 during the quarters ended
September 30 and December 31, 1999, and a total of $331,782
during the year ended December 31, 1999).
-- Amortization of goodwill, deferred compensation and other
acquisition-related charges including amortization of
identifiable intangible assets, purchased in-process
research and development, and other business combination
costs ($491,501 and $498,367 during the quarters ended
September 30 and December 31, 1999, respectively, and a total of
$1,152,121 during the year ended December 31, 1999).
AT HOME CORPORATION
CONDENSED CONSOLIDATED RESULTS OF OPERATIONS
(In thousands, except per share data)
Three Months Three Months Year
Ended Dec. 31, Ended Sept. 30, Ended Dec. 31,
1999 1998 1999 1999 1998
(unaudited) (unaudited)
Revenues(1) $128,753 $19,237 $112,562 $336,955 $48,045
Costs and
expenses:
Operating
costs 50,112 15,996 45,260 143,056 46,965
Product
development
and
engineering 20,223 4,957 16,834 54,805 17,009
Sales and
marketing 49,596 5,257 48,179 130,725 18,091
General and
administrative 10,722 3,518 9,028 30,276 12,429
Total costs and
expenses before
investment gain,
cost of distribution
agreements and
merger and
acquisition
related
costs(2) 130,653 29,728 119,301 358,862 94,494
Loss from
operations
before investment
gain, cost of
distribution
agreements
and merger
and acquisition
related
costs (1,900) (10,491) (6,739) (21,907) (46,449)
Interest
income, net 2,414 2,940 2,556 10,253 6,413
Net income
(loss) before
investment gain,
cost of
distribution
agreements and
merger and
acquisition-related
charges 514 (7,551) (4,183) (11,654) (40,036)
Investment gain
from business
combination -- -- -- 12,566 --
Equity share
of losses of
affiliated
companies (5,956) -- (2,876) (9,574) --
Cost and
amortization
of distribution
agreements (214,312) (54,595) (43,932) (296,057) (101,385)
Amortization
of goodwill,
deferred
compensation
and other
acquisition-
related
charges (503,256) (2,758) (447,569) (1,152,919) (2,758)
Net loss $(723,010) $(64,904) $(498,560)
$(1,457,638) $(144,179)
Net income
(loss) per
share before
investment gain,
cost of distribution
agreements
and merger and
acquisition-related
charges
- basic $0.00 $(0.03) $(0.01) $(0.04) $(0.18)
Net income
per share
before investment gain,
cost of
distribution
agreements
and merger and
acquisition-related
charges
- diluted $0.00 n/a n/a n/a n/a
Net loss per share
- basic $(1.93) $(0.28) $(1.37) $(4.61) $(0.63)
Shares used
in per share
computation
- basic 374,758 235,381 362,885 316,441 228,479
Shares used in
per share
computation
- diluted 438,772 n/a n/a n/a n/a
(1) Revenue
from related
parties $7,500 $4,372 $8,916 $28,821 $10,458
(2) Depreciation
and amortization
included in costs
and
expenses $17,904 $4,726 $15,293 $49,467 $15,029
AT HOME CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
December 31, 1999 December 31, 1998
ASSETS
Current Assets:
Cash and cash equivalents $224,548 $300,702
Short-term investments 300,675 118,587
Total cash, cash equivs.,
and short-term
investments 525,223 419,289
Accounts receivable, net 52,253 6,358
Related party receivables 18,279 4,300
Other current assets 35,151 3,381
Total Current Assets: 630,906 433,328
Property, equipment
and improvements, net 176,077 49,240
Investment in
affiliated companies 19,015 ---
Strategic investments 273,005 8,527
Distribution agreements, net 313,772 186,247
Goodwill and other
intangible assets, net 7,614,847 93,989
Other assets 76,657 9,300
Total Assets: $9,104,279 $780,631
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $44,781 $7,100
Related party liabilities 22,916 3,684
Accrued compensation
and related expenses 15,632 2,504
Deferred Revenue 56,844 5,164
Other accrued liabilities 63,044 12,507
Current leases and
other financings 38,666 12,045
Total Current
Liabilities: 241,883 43,004
Convertible debentures 736,294 229,344
Capital leases
and other financings,
less current portion 52,552 14,356
Other liabilities 6,533 61
Total Liabilities: 1,037,262 286,765
Stockholders' Equity:
Preferred stock 397,019 --
Common stock 9,312,704 719,680
Notes receivable
from stockholders (4) (4)
Deferred compensation (50,493) (2,880)
Accumulated other
comprehensive income 92,594 4,235
Accumulated deficit (1,684,803) (227,165)
Total Stockholders'
Equity: 8,067,017 493,866
Total Liabilities
and Stockholders'
Equity: $9,104,279 $780,631
SOURCE Excite@Home
CONTACT: Investor Relations of Excite@Home, 650-556-6060, or Public
Relations, Melissa Walia, 650-556-2213, of Excite@Home/
/Web site: http://www.home.net/
(ATHM)
CO: Excite@Home
ST: California
IN: CPR MLM ENT
SU: ERN
LG
-- NYTH171 --
6548 01/20/2000 16:35 EST http://www.prnewswire.com