When I finally got hold of myself, I remembered that I am, in fact, a shareholder in Excite@Home and that I do believe in the company. Yes, fellow shareholders, I too am feeling the pain that comes from owning this stock over the last year. It's no secret that Excite@Home's shares have tripped, have fallen, have tanked -- any phrase you like.
The stock is way down from its all-time high, and while that might temper my enthusiasm (and the Breaker Port's) in the short run, I am a long-term investor. I intend to continue holding Excite@Home for the same reasons I initially bought the stock. I'm excited about Excite@Home. (Couldn't resist that one.)
Excite@Home provides high-speed, "always-on," broadband cable Internet connections to homes and businesses. Accessing the Internet through Excite@Home gives you the Internet and all the fun that awaits you on your favorite websites at speeds vastly quicker (somewhere between 50 and 100 times quicker) than a regular old dial-up connection.
As if that wasn't enough, the "always-on" part means that you'll no longer have to bother with actually connecting your computer to the Internet -- with Excite@Home you'll be connected all the time. And no more needing a second phone line since your connection will be through the same fiber-optic cable that feeds MTV to your television -- not the feeble copper wire you're calling Aunt Mary on.
The Internet today is more dynamic than ever, and this trend will only grow as more streaming video is offered, along with more interactivity. This stuff isn't going to flow very well through the usual narrow-band channels and that's where Excite@Home really comes in.
The company is the absolute first-mover when it comes to broadband Internet access. It has about twice the subscriber base than its nearest competitor, Time Warner <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: TWX)") else Response.Write("(NYSE: TWX)") end if %>. Other broadband access technologies, like digital subscriber lines (DSL) and wireless broadband access, are just beginning to be rolled out, and they have their own issues.
For DSL to work, for instance, the subscriber has to live within three miles of one of the phone company's "switching centers," and 40% of American households currently don't. An additional 20% of Americans get their phone service through a digital loop carrier. DSL won't work on those kinds of systems.
While the phone companies are working on getting this stuff taken care of and up and going, Excite@Home is buzzing ahead with its cable modems, connecting 1.5 million people so far to the Internet. The company expects to have 8 million wired up and surfing with ease by 2002. Catching up to Excite@Home will be an enormous challenge for its competitors.
I can see you asking yourself, "Well, if all that's so great, then why has the stock price tumbled, eh?" Good point.
Last year, Excite@Home suffered something of an identity crisis in the eyes of investors as it went from being just @Home to Excite@Home. The acquisition of Excite, an Internet portal/content provider, threw people. It appears to still be throwing them.
The company is obviously planning to provide content along with its fast connections. As Fool andystj said in his debut (!) post on the Excite@Home board, "Compelling content is necessary to differentiate the product." To me, while I agree with his logic, the main reason I like Excite@Home is the potential for its growth as a provider of fast Internet hookups. The Excite purchase, though, does help explain why the stock has been trampled. Hopefully, Excite's value to Excite@Home will be better understood by investors going forward.
There are other reasons that the company's stock has had a bad year. There's been uncertainty about the company's ownership structure, since AT&T <% if gsSubBrand = "aolsnapshot" then Response.Write("(NYSE: T)") else Response.Write("(NYSE: T)") end if %> is a majority owner and wants more. There's been fear that the government was going to step in and force Excite@Home to open up its cable lines to competitors. With the Portland appeal decision recently, and words from Federal Communications Commission chairman William Kennard that he prefers free market solutions to governmental ones, this fear shouldn't be a big factor anymore. Regulators at the federal level don't want to do anything to slow the growth of high-speed Internet access, and with the win against Portland, localities won't have precedence to try and force open access.
Excite@Home is a complicated story, without a doubt. But I'll let one of our community members, pookiepuss, tell you why the company will succeed since he sums it up better than I could:
1. Great product
2. High demand
3. Fair price for service
4. Low market penetration rate = GROWTH
That about says it, I think. I acknowledge that last year was a questionable one for the company and a bad one for the stock. However, I think that the bigger picture here is the key to really getting this company and understanding its potential. It's certainly, in true Rule Breaker form, a top dog and first mover in an emerging industry. Its opportunities are many and growth potential great. With vision and patience, investors will ultimately be rewarded.
I'll finish with a quote from another Fool, SplitTheDark. This Fool said, "Excite@Home has had some problems in the past year, and they may continue to have some problems in the future. That is the nature of the Internet and telecommunications industry. But I like how Excite@Home has handled its problems so far, and as long as I continue to like how they react to the changing times, I will stay invested for the long term. After all, I am a Fooooooooooool!"
Yep, me too.
** Many thanks for help and ideas to all the wonderful and insightful Fools on the Excite@Home discussion board. (In particular, pookiepuss, CodeWarrior, sdkid, ojanen, TMFNole, andystj, FR1, gatorhater, eljar66, and Draegerman.)
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