Excite@Home Plunges Despite Cash Infusion

The prospect of an $85 million check fails to impress investors.
By George Mannes ,

Excite@Home

(ATHM) - Get Report

is trying to get its house in order, but investors aren't happy with the redecorating.

The high-speed Internet access company announced the renegotiation of a 1999 technology agreement with its now-controlling shareholder

AT&T

(T) - Get Report

, a deal that will drop $85 million into the cash-thirsty gullet of Excite@Home. Separately, Excite@Home said that the cable companies

Cox Communications

(COX)

and

Comcast

(CMCSK)

, two major shareholders that market Excite@Home's service to their subscribers, will be ending their exclusivity arrangements with the company in December, six months ahead of schedule.

Shares in Excite@Home, which had said early Tuesday that it was scheduling a conference call after the market's close to discuss company news, fell 32 cents, or 14%, to close at $1.90. In after-hours trading on

Island

, following Excite@Home's release of its news, the stock fell to $1.75.

Cash on the Barrel

The stock's decline comes a day after the company said in a proxy filing that it was

seeking permission to execute a reverse stock split in case it has to shore up its stock price to avoid getting delisted from

Nasdaq

. The stock's price fell 21% on Monday. Nasdaq often moves to delist shares once they trade below $1 for a certain period.

In its conference call, Excite@Home executives said the AT&T deal, along with

a previous financing that has proved unpopular in the market, give the company access to $185 million, more than enough to meet the company's cash needs through the end of the year. Chief Financial Officer Mark McEachen defended the earlier transaction, saying the market had characterized it as worse for Excite@Home than it actually was.

An Excite@Home spokeswoman says that Cox and Comcast will continue to market Excite@Home on a nonexclusive basis after December, though they will forgo warrants they would have earned for subscriber growth had they kept the exclusive relationship. Excite@Home says it expects to conclude discussions soon with the cable companies over restructuring their deals.

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