Portal landscape
From a business perspective, however, AOL has much to offer, including a powerful brand name and 20 million paying subscribers. Whether it can increase that base without access to broadband could pose a potential problem down the road. Meanwhile, the Excite portal, while one of the premier content sites, is experiencing relatively anemic traffic growth.
ExciteAtHome's second-quarter page views grew only 5 percent sequentially. This compares to Yahoo's (YHOO: news, msgs) 15 percent, excluding its GeoCities property, and Lycos' (LCOS: news, msgs) 17 percent sequential growth.
Marketing efforts haven't helped ExciteAtHome expand its reach. The reach has steadily eroded for five consecutive months, according to Media Metrix. Yahoo's reach, excluding GeoCities and Broadcast.com, by comparison, has gone from 50.4 in March to 52.9 in August.
Given the high stakes involved in getting big fast, an AOL-and-Excite combination might be compelling, so long as it has access to AtHome. Making the pieces fit, though, is certain to result in an incredibly complex transaction.
Rumors first surfaced two months ago that AOL and AT&T were in talks regarding ExciteAtHome. Ma Bell later acknowledged the talks had taken place, but it said discussions had stopped.
"Talks have failed in the past because both sides want to control the customer through billing relationships," said Takeshi Kawamoto, portfolio manager at Nomura Securities. "This battle for end-user account control may cause the talks to continue for quite some time."
Investors expecting a quick announcement may be disappointed, he said.