Is AOL Really Buying Excite?

Not according to Uncle Leo, AT&T's head of Internet initiatives. Have your say on our message board.
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The Street has been going crazy for the past 24 hours with rumors, one of the most prominent focusing on a possible purchase by

America Online

(AOL)

of the

Excite

portion of

Excite@Home

(ATHM) - Get Report

.

This is one that at least makes some sense -- though splitting up the Excite merger with

@Home

, which only closed about four months ago, seems perverse -- but I'm skeptical.

AOL-Excite merger? Tell us what you think on our

message boards.

Mind you, I'd like to see a deal happen because it would be Step One in a plan that would allow AOL to cut a deal with

AT&T

(T) - Get Report

, which I'm long, for carriage on the cable-modem services of all those cable systems AT&T's been buying. Regular readers know that I think AOL will eventually find a way to get together, despite Excite@Home CEO Tom "TJ" Jermoluk's vigorous resistance.

But I've been working the phones, and I get repeated denials from those who would be close to a deal-in-the-making.

Moreover, listen to Leo Hindery, AT&T's head of Internet initiatives, from an interview on

CNet

last night. Asked about the rumored negotiations for an Excite sale, he said, "Absolutely not. There have been no discussions under way whatsoever. I typically don't comment on things of that sort, but when it's absurd, I do."

And, from that same

CNet

interview, "Asked if an Internet deal with AOL was in the works, or if the two companies had talked since this summer, Hindery said, 'No, they haven't talked for many months, so nothing is in the works.'"

It's a shame. An Excite-less Excite@Home could focus on running its cable-modem networks, not on content. And if AT&T could require cancellation of the exclusive carriage deal Excite@Home got when AT&T picked up the former

Tele-Communications Inc.

cable systems, the benefits of an AOL-AT&T deal would follow. Customers and shareholders of AT&T and AOL would benefit substantially ... and I don't think an already-stumbling Excite@Home would be hurt much more than it already has been. (The market would probably agree: On Wednesday, in the midst of these swirling rumors, Excite@Home closed up 5, the nicest day-to-day gain the company's shareholders have seen in months.)

Still, rumors often have shreds of fact buried within them. If not now, as Hindery seemed to say so definitively ... maybe sometime soon.

zShopping:

As promised, I went to the new

zShops

area on

Amazon.com

(AMZN) - Get Report

early this morning. Rummaging around, I found lots of categories, but not nearly as much merchandise for sale as I'd expected -- and not as much as Amazon CEO Jeff Bezos announced at the zShops press conference yesterday, when he said zShops would open with at least 500,000 items for sale.

Tell us what you think about Amazon on our

message boards.

As I said in a post on our

TSC

message boards this morning, I didn't try to count all the items for sale -- but it looked to me a lot nearer 50,000, and maybe just 5,000, than Bezos' half-million.

I did, however, find a few of the kind of name-brand merchants and manufacturers he had said would be using the site. A fair number made a feeble effort to conceal their identities -- to avoid disturbing their other distribution channels, no doubt -- under what I quickly came to think of as "nom de sales" handles.

Cambridge Soundworks

, for example, is there with many of its superb speaker systems. I've been a Cambridge Soundworks customer since shortly after the company, built around the designs of audio genius of

Henry Kloss

(co-designer of many of the classic KLH and AR speaker systems; then founder of

Advent

, known for its superb speaker systems and cassette decks; then founder of

Kloss Video

, which produced the first home-video projectors worth the effort), opened its doors. Cambridge lists itself in zShops as "hifidotcom," which the cognoscenti know to be Cambridge's Web site address.

Companies such as Cambridge Soundworks are obvious candidates for sales in Amazon's zShops: They have nothing to lose, since, without retail channels to disturb, they can feel free to sop up these incremental sales dollars. Sure, Cambridge would rather sell you its products even more directly, from its Web site or over the phone, but zShops' sales are still plenty profitable for the company.

Multiply the Cambridge Soundworks example by thousands of other direct sellers' positions, and you get an idea of what we might see on zShops soon. For other manufacturers, with multiple and already-overlapping distribution channels to protect, or at least pacify, zShops may be less appealing.

Many of the listings show the problems inherent in the early days of nearly any business, especially ones which put so much of the enterprise in the hands of sellers. For example, the text accompanying many entries on zShops speaks over and over again of prospective buyers' ability to "bid with confidence," boilerplate revealing the sellers' origins in the world of online auctions.

And many listings are missing critical elements, such as shipping charges (though they assure us that "buyer pays" -- pays

what

?). Often, a listing promises a photo of an item -- for example, an

Arthur Rackham

painting said to be from the turn-of-the-century British illustrator's own collection -- but lo and behold, no photo. (The Rackham painting, by the way, was the priciest item I found, at a cool $125,000. Do I think it's going to sell on zShops? Not today, not tomorrow...)

Still, the zShops launch, dehydrated though it may be, is probably enough to build a good business -- and to keep the newly rebuilt Amazon stock price up.

Given Wednesday's climb -- up a fat 15 bucks -- we may see a little profit-taking today. But remember that today is an end-of-the-quarter day, and lots of fund managers who came to the party a little late, and maybe a little too skeptically, are going to be loading up on Amazon today to get it on the books for that next mailing to customers.

So I expect to see shares of Amazon hold on to their Wednesday gains and probably edge up a little more today. Tomorrow and next week? Look for some share-price erosion, as the zShops buzz and end-of-quarter effects fade.

Y2K Watch:

Interesting report from Washington last week on one of the nastier, if less-obvious, Y2K risks. The

Senate's Committee on the Year 2000 Technology Problem

issued its final report, waving a warning flag about the effects on international trade and, possibly, U.S. national security of Y2K-related failures abroad.

While downplaying the likelihood of domestic problems, the report spoke of "severe long- and short-term disruptions to supply chains ... likely to occur" as a result of Y2K-related computer problems. That could be bad news, of course, for U.S. companies relying on components manufactured abroad.

"Several important U.S. trading partners are severely behind in addressing the Y2K problem ... and are not likely to avoid significant disruptions," the committee report says.

U.S. strategic and trading partners Russia and China, and oil-producers Venezuela, Nigeria, Saudi Arabia, Colombia and Kuwait, are mentioned as ill-prepared and likely sources of problems.

Italy is a special problem, the report says, in large part because of the number of foreign visitors expected to travel to the Vatican for religious celebrations in the millennial year.

The report also takes a whack at the

State Department's

recently released assessment of Y2K-related issues for travelers, damning it as "rather general, with little to distinguish one country from another."

Jim Seymour is president of Seymour Group, an information-strategies consulting firm working with corporate clients in the U.S., Europe and Asia, and a longtime columnist for PC Magazine. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. At time of publication, Seymour was long AT&T, although holdings can change at any time. Seymour does not write about companies that are current or recent consulting clients of Seymour Group. While Seymour cannot provide investment advice or recommendations, he invites your feedback at

jseymour@thestreet.com.