Excite@Home - @home, 1995-1998

@HOME (1995-1998)

@Home was formed in 1995 as a national high-speed Internet service. Its principal backers were cable TV system operator TCI and investment banking firm Kleiner, Perkins, Caulfield & Byers. William Randolph Hearst III was the company's first CEO. The company planned to offer high-speed Internet access over cable TV systems by forming partnerships with cable multi-system operators (MSOs) such as Continental, Cox, and Comcast. At the time manufacturers such as Hewlett-Packard and Motorola were just beginning to consider making cable modems and were looking for ways to make them inexpensively. For @Home's vision of high-speed Internet access to succeed, its service needed wider availability, and the price of cable modems needed to come down.

In October 1995 @Home entered into an agreement with Netscape to license Netscape's software. Together, @Home and Netscape planned to develop a customized version of Netscape's Navigator software that would allow for local content, advertising, and e-commerce over a cable connection to the Internet. To stimulate the manufacture of low-cost cable modems, TCI sent out an RFP (request for proposal) to vendors such as Motorola, Zenith, Intel, Northern Telecom, and Hewlett-Packard for hundreds of thousands of units.

@Home expected to roll out to a limited number of homes in early 1996 but had to scale back its plans due to a lack of infrastructure. In June 1996 cable companies Comcast Corp. and Cox Communications Inc. agreed to invest in @Home and take equity stakes of 14 percent each. TCI's stake was reduced to 45 percent, and investment-banking firm Kleiner, Perkins, Caulfield & Byers's interest was also 14 percent. In August @Home named Tom Jermoluk as its chairman, president, and CEO. Jermoluk was formerly president and chief operating officer (COO) of Silicon Graphics Inc. (SGI). Founding CEO William Randolph Hearst III remained as vice chairman of @Home.

Late in 1996 @Home signed content agreements with the HotWired Network, The New York Times, and USA Today for multimedia services the company would introduce in early 1997. In February 1997 @Home signed charter advertisers for its high-speed service including General Motors Corp. and Conde Net. Some 100 companies that had agreed to provide content for @Home were allowed to run unpaid ads on the network.

In 1997 @Home began to establish its @Work division to provide high-speed Internet access to businesses and their employees. Through an agreement with competitive access provider Teleport Communications Group, @Home gained access to potential business customers in more than 55 major cities and other markets. The company continued to sign cable partners to carry its high-speed Internet service in 1997, including Marcus Cable in Fort Worth, Texas. It also entered the Canadian market through an agreement with Rogers Cablesystems and Shaw Communications, Canada's two largest MSOs, who took a joint five-percent interest in @Home. Later in the year @Home gained access to 5.5 million potential customers in the Northeast through an agreement with Cablevision Systems Corp.

@Home filed for an initial public offering in May 1997 and went public in July. Its stock more than doubled on the first day of trading, from its initial $10.50 price to a high of $25.50 before settling at $19. The IPO gave @Home proceeds of $94.5 million and a market capitalization of more than $2 billion. For 1997 @Home had revenue of $7.4 million, compared to $700,000 in 1996.

In 1998 @Home's market capitalization reached more than $23 billion as investors drove up the price of Internet stocks. @Home added more cable partners, including Jones Inter-cable Inc., Cogeco Cable Inc., and Garden State Cable TV. By mid-1998 @Home was close to reaching 60 million homes in North America through agreements with its cable partners. During 1998 AT&T acquired TCI and became the principal shareholder in @Home. That December, @Home acquired Narrative Communications Corp., an interactive advertisement software provider, for $90 million in stock.