Update: Excite@Home CEO to Step Down - TheStreet

Update: Excite@Home CEO to Step Down

George Bell, however, said he would remain as chairman at least until the end of 2001.
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Updated from 6:55 a.m. EDT

George Bell, the chairman and chief executive of the high-speed Internet service provider

Excite@Home

(ATHM) - Get Report

, will relinquish his executive role once a suitable replacement is found, the company said Tuesday.

Bell, however, will remain as chairman at least until the end of 2001, the company said.

``I remain deeply committed to continuing as CEO until such time as the board can find a qualified new CEO," Bell said in a statement. "As broadband demand grows, and as we continue to execute, I believe the company's best market opportunities still lie ahead.''

Bell said splitting up the chairman and chief executive jobs was a natural part of the company's growth.

Bell, a 43-year-old former professional squash player, was hired in 1995 as Excite's first chief executive. The Internet portal was founded by six

Stanford University

graduates in 1994, and, at that time, took its revenues from advertising. Though it had only 22 employees, Excite managed to sell itself to

@Home

, a broadband Internet service provider owned by a group of cable companies, for stock valued $6.7 billion last year.

Since then, the combined company's stock has slid from a 52-week high of $59.75 to close at $16.18 Tuesday, up 25 cents. Its market capitalization of around $6.6 billion is less than it paid for Excite. And the company's stock market value fell further in after-hours trading, as the shares dropped to $15.50, according to

Instinet

.

Meanwhile,

AT&T

(T) - Get Report

, Excite@Home's largest shareholder has increased its control of the company, placing former employees on the management team. The telecommunications giant now owns a 25% equity stake and 74% voting interest in Excite@Home.

William Randolph Hearst III, a member of the company's board, said in a telephone interview that Bell's departure does not signal a shift away from the media business. "There's been a lot of thought given to that since the merger," he said. But referring to the media business, he said, "You don't want to

not

be in it. The new CEO is going to have to have instincts in both worlds."

Repeatedly citing the merger of

Time Warner

(TWX)

and

America Online

(AOL)

, he said Excite@Home would continue to view the media and Internet service businesses as one. "When you have both a content offering and a service provider offering, you can combine them into a simplicity offering," Hearst said.

Dana Serman, an analyst for

Lazard Freres

, said entrepreneurs like Bell and Tom Jermoluk, whom Bell replaced as chief executive in January and as chairman in May, lack the patience for the slow, steady business of signing up subscribers that the company's business model now demands.

They are "the type of people who like to take a company public and take it through its first couple of years of growth but not work under the likes of Michael Armstrong," Serman said, referring to the chairman of AT&T. Serman, whose firm has not done underwriting for Excite@Home, rates the company's shares an outperform.

But Hearst said Bell's personal life is the reason for his resignation.

"In some ways, he'd like to be CEO forever, but he really loves his family and he can't be in two places at the same time," Hearst said.

Armstrong said in a statement that "the new CEO will work closely with George, the management team and the rest of the board to take Excite@Home to the next level of growth.''

Excite@Home retained the executive search firm

Christian & Timbers

to seek a replacement for Bell, and it named as search committee members three of its directors: Hearst; John Petrillo, AT&T executive vice president of strategy and business development and Dan Somers, president and CEO of

AT&T Broadband

.

Hearst said the search team hopes to compile a list of chief executive candidates within 30 days.