PALO ALTO – The slaughter sweeping the dot-com sector appeared ready to take down one of the oldest and most well known consumer Internet companies Monday, after ExciteAtHome Corp said it may not be able to survive.
In the annual report filed with the Securities and Exchange Commission, auditors Ernst & Young LLP expressed ``substantial doubt'' about ExciteAtHome's ability to continue as a going concern.
Officials of ExciteAtHome, which operates of a popular Internet content site and is one of the biggest high-speed Internet services, were not immediately available for further comment.
The company's stock price plunged more than 40 percent to 49 cents in early afternoon trade on Nasdaq, after earlier hitting a record low of 44 cents. The share is trading at a small fraction of its 52-week high of $18.56.
The collapsing stock price could prove to be the last straw for the company, which is already burdened by steep losses, a shortfall of cash and a stable of money-draining assets which it is unable to sell.
If the share price remains below $1, ExciteAtHome could be delisted by Nasdaq, which would put it in violation of covenants on some $100 million in debt outstanding, meaning that the debt could be called for early repayment.
Standard & Poor's lowered it credit rating on ExciteAtHome to triple-'C' from single-'B'-minus and its rating on the company's subordinated debt to double-'C' from triple-'C.'
ExciteAtHome, which was formed in the celebrated 1999 merger agreement of two blue-chip Internet companies, says it is essentially bleeding cash through the media part of its business, which has suffered from the collapse in the Internet advertising market.
The company has been trying for several months to sell its media businesses, including the Excite.com portal and related sites, but has been unable to find anyone interested in buying them.
The 1999 merger that joined of the Excite.com Internet portal and the AtHome Corp high-speed Internet service provider proved to be a cumbersome combination that ran up high costs and, critics said, caused both businesses to lose focus.
While the company has been struggling to earn a profit for some time, its financial situation has rapidly deteriorated in recent months. In July, the company reported a loss of $346 million, and said it did not have enough money to make it through the year -- a stunning revelation since it had just recently raised $100 million in a bond sale and another $85 million from AT&T Corp.
``It's certainly not a good sign, considering that only a few months ago they raised additional capital,'' said Drake Johnstone, an analyst at Davenport & Co.