AT&T Offers For Excite@Home Assets

AT&T is set to purchase the broadband Internet access business and services assets of Internet service provider @Home Corp. for $307 million.

In addition to selling off its assets, @Home, which does business as Excite@Home, filed for relief under Chapter 11 of the U.S. Bankruptcy Code on Friday in a San Francisco court.

The sale of @Home's assets hinges on the court's approval of the sale and whether another company makes a higher offer, according to a company statement. The boards of both companies have already approved the asset-purchase agreement.

"This filing is a tool to protect the value of the broadband business for the benefit of the company's financial stakeholders and will help reassure our customers that service will continue uninterrupted through the restructuring process," said Patti Hart, @Home's chairwoman and CEO, in the statement. "AT&T 's offer reflects the value in our network, services, customer base, and skilled employees."

Redwood City, California-based @Home serves about 3.2 million broadband subscribers, but it has been hurt by lagging advertising revenue and bad investments.

Investments Gone Sour

Part of the company's problems stemmed from investments it made over the past couple of years, including its Excite.com portal, that didn't pan out, said Mike Paxton, a cable industry analyst at Cahners In-Stat Group in Scottsdale, Arizona.

In 1999, @Home Network completed a $6.7 billion merger with the Excite Inc. portal. The merger, however, didn't pay off. Although the integration of the two companies seemed to go well, according to Paxton, the advertising revenue never materialized as expected.

Last week, @Home said it would lay off close to 25 percent of its staff and would make large cutbacks to its portal services. The sale should make it possible for customers to continue using the company's service, AT&T said in a statement. Paxton agreed.

"Excite@Home's customers shouldn't be particularly worried, because [the company] is reorganizing and selling its properties and business to AT&T , so there won't be any interruption in service," he said.

AT&T also said if the asset sale is approved, it plans to build on the assets it acquires to develop a more robust network, while improving and growing its broadband high-speed Internet access business.

Responding to @Home's bankruptcy filing, the Washington-based Nasdaq Stock Market today halted trading in the company's stock and requested additional information from the company.