Excite told 'ditch the portals or die'

Excite@Home has been warned it must get rid of its portal businesses in the US and Europe and concentrate on broadband if it is to survive.

Forrester analyst, Hellen Omwando said Excite has to offload its content businesses that are sapping remaining cash reserves or risk not coming out the other side of the IT recession.

Omwando said Excite's portal businesses have been losing money for a while, citing a lack of local content as one of the problems. She said: "Excite have no future as a portal. However, as a broadband provider, especially in the US, they can manage to come out of the hole they are in."

Omwando added: "Excite can sell its portal businesses to European ISPs that are still on spending sprees for second rate portals. Tiscali is the most obvious suitor as it owns 70 per cent of Excite's Italian portal. T-Online is the other option, as it is seeking a UK presence to be a true pan-European player."

Rebecca Miskin, MD of Excite UK, which is a joint venture with BT, refuted claims that problems with the US side of Excite will have an effect on UK operations. "We are separately funded and legally independent from the Excite US. We have millions in the bank and have no dependency on the US," she said.

However, Omwando questioned this point. "Excite@Home in the US are financially responsible for 58 per cent of the UK company. If your financial situation looks grim, as the US arm of Excite does, it's hard to see how a sister company can be unaffected."

Adding to its financial troubles, two of Excite's major cable TV partners, Cox and Comcast turned their backs on the company on Friday. The two companies, who own seven per cent and 7.6 per cent of Excite respectively, will not offer the troubled company's internet service to their subscribers after their contracts expire in June 2002 having reflected on the company's financial difficulties.

Excite is also under pressure to pay back a $50m convertible bond lent by Promethean Investment Group, although the creditor relaxed demands that the financially strapped company pay up by this Friday after it claimed Excite had violated the conditions of the original $100m loan.