David Alger interview in today's Bear-ons: |
From Raging Bull fame..
'Q: You're also a fan of @Home, which is moving up after the deal between Comcast and MediaOne.
A: It's a great deal. We still own a very large position in Comcast. We think the cable companies are the Internet providers of the future. The fact that suddenly Comcast will have this access to homes is just massively exciting.
Q: What's the case for @Home?
A: It's a truly interesting company with a unique place in this business. The problem with the Internet, as any user will tell you, is lack of bandwidth. It is too slow to retrieve. You can't get good, full-motion video. A guy sitting at home is frequently frustrated by the access time. This problem needs to be solved. One solution is to put the Internet over cable television, which is a much bigger band width, rather than through the phone line. @Home is the leading company to do that. It has deals with just about every cable company -- TCI, Cox, Comcast, Cablevision. The only ones it's now lacking are Warner Communications and MediaOne, which of course is being taken over by Comcast. At the end of 1998, @Home had 300,000 subscribers hooked up to this system. It's rising sharply. They just announced the acquisition of Excite, a leading portal company. It's a content provider. This lets @Home offer not only the ability to hook up cable TV and get much faster Internet service, but also provide its own proprietary portal.
Q: How much is it growing? What's the stock worth?
A: Right now, @Home sells for about 138, having risen fairly sharply in the last couple of days. I would be perfectly comfortable seeing the stock at 200 in the next couple of years. I think it will have a million subscribers at yearend. Their market cap is $17 billion, which is a very high valuation per subscriber. However, by the end of 2002, we expect them to have over eight million subscribers. Assuming @Home is at 200, it would have a market cap of about $35 billion, or $4,375 per subscriber. That's comparable to many cable TV companies. Another way to look at it is that, in 2002, we expect the combined @Home/Excite to generate revenues of $2.2 billion, and earnings per share of around $3. A valuation of 70 times earnings would put the stock at $210. Please note that the company will still be growing at an extremely high rate at this point.'
He also likes BCST in the interview.
And the robins be dancing in the sun here!