Gotta have Hart

The dotcom bubble continues to decompose. Broadband data service provider Excite@Home last week named telecommunications veteran Patti Hart as chairman and CEO in an effort to turn around a business that has been hemorrhaging money in a dotcom-unfriendly era.

Hart replaces Internet veteran George Bell in both positions. Bell was one of the founding executives of content provider Excite and helped orchestrate its merger with data delivery provider @Home in 1999. After announcing plans to resign as CEO, Bell was expected to remain as chairman but left the post last week.

“His passion and balanced energy made him one of the founding fathers of Internet media — a world, that, with no small thanks to George's vision, will live on when the current market conditions are a distant memory,” said Mark McEachen, Excite@Home's executive vice president and CFO, during a first- quarter earnings conference call.

At the same time, McEachen said the company's first-quarter loss had widened, layoffs appear likely and Excite@Home needs to find money to supplant declining share prices and advertising revenues.

That's Hart's job. Her background is operations, having served as chairman, president and CEO of Telocity and president and COO of Sprint's long-distance division.

“It is really turning the page on the Excite@Home story and moving onto the next chapter and finding ourselves with an enormous focus on operational excellence,” Hart said. “I don't think that means that we take the great thinkers and dreamers that we have here and toss them aside. I think it's more additive and refining.”

Whatever it is, it must happen fast. Excite@Home continues to bleed money and its MSO partners, Comcast and Cox Communications, soon will leave the fold as their contracts expire while AT&T begrudgingly assumes the financial burden.

“They're a struggling company,” said Rob Lancaster, an analyst with The Yankee Group. “Occasionally, you'll hear the AT&T folks refer to @Home as ‘we.’ I think, if AT&T wants them to succeed, they'll succeed. Otherwise, they'll get wrapped into one of the AT&T units.”

Whatever happens, Excite@Home should shed its media/content business, said Keith Kennebeck, an analyst with The Strategis Group.

“I don't know if it's the best business to be in,” Kennebeck said. “I think it's better if they sold it off. But then again, they never should have bought it in the first place.”

Hart disagrees. “I don't think it was a mistake. I think it has allowed us to provide a more robust offering to our cable partners,” she said. On the other hand, “we could say if we knew what we know about the advertising business… everybody would have done things differently from an advertising perspective.”

Nevertheless, Hart insists content is “a front-door experience that I think, in the broadband world, will become more critical.”

Narrowband is another matter. Excite@Home lives off speed, not providing content to dial-up users. That portion of the business probably is history.

“That's not the only possibility,” Hart said. “I think there is a reshaping possibility.”

The company needs “reshaping.” Hart knows her job is to move Excite@Home from dotcom to corporation, including changing the Silicon Valley mindset.

“It isn't impossible,” she said. “At the end of the day, most people are interested in working for a successful company that they're proud to be a part of. They really want to drive shareholder value because most of them are shareholders.”

Hart says her challenge is “helping [employees] understand the cause and effect between what we're doing and creating shareholder value.”

It may be too late for that.

“It's a tough business,” Kennebeck said. “It's very uncertain where the revenues are coming from.”

Kennebeck does maintain some hope: “The MSOs need them to connect to the Internet, and they need to have that managed. Somebody needs to do that, but it hasn't proven to be a successful business so far.”