Vultures circle Excite@Home

Ailing broadband service provider/portal At Home Corp. (best known for its Excite@Home brand) may not last out the year, the company's auditors said Monday in a report filed with the Securities and Exchange Commission.

At Home said its net tangible assets and stockholders' equity have dropped below the thresholds needed to maintain a Nasdaq stock exchange listing, and that its shares are trading below the US$3 minimum required when Nasdaq's asset and equity standards aren't met.

Nasdaq's rules for allowing a company to remain on the exchange are complex. The exchange requires companies to maintain either $10 million in shareholder equity and a $1 per share trading price, or a $50 million market capitalization and a $3 per share trading price.

While At Home ended last week with a $355 million market capitalization, the company's shares have been trading under $3 since mid-June. The company had no shareholder equity as of June 30, the end of At Home's most recent fiscal quarter. Instead, it's into the red, with $197.31 million in shareholder liabilities.

A Nasdaq delisting for At Home would send a stack of financial dominos cascading. Of the $185 million the company raised in June to fund continuing operations, $100 million came from convertible notes issued by outside investors. The notes require At Home to maintain a listing on either the Nasdaq, the New York Stock Exchange, or the American Stock Exchange. If it loses its listing, the company's investors could accelerate its repayment schedule and demand cash.

At Home listed a litany of daunting obstacles in its filing. The company said it doesn't expect the online advertising market to recover in the near future, and said it hasn't been able to secure financing and standard payment terms from some of its equipment vendors and other key suppliers. It's also suffering a drain from real estate lease commitments.

At Home said it's attempting to conserve its cash through layoffs -- the company recently cut another 200 positions, following several earlier rounds of staff cuts -- and by continuing to seek a buyer for some of its media assets. Shareholders have approved a reverse stock split to boost At Home's share price above $3, but there's no guarantee the share price would remain that high.

At Home had $154.28 million in cash and cash equivalents on hand as of June 30.

Investors reacted swiftly to news of At Home's gloomy prognosis. Standard & Poor's Corp. lowered At Home's junk-bond-status credit rating to CCC- from B-. Trading volume skyrocketed as investors dumped stock: More than 24 million shares changed hands Monday before At Home (ATHM) ended trading at $0.46, down 47.1 percent.

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Stacy Cowley

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