The decrease in revenues was driven by a decline in media and advertising revenues, which was partially offset by strong growth in residential broadband subscription revenues.
Demand for Excite@Home’s residential broadband service remained strong, as net subscriber additions in the quarter totaled 474,000, an increase of 62% from the 292,000 added in the second quarter of 2000. Excite@Home’s worldwide subscriber base grew to 3,674,000 at June 30, 2001, an increase of 115% from 1,708,000 at June 30, 2000.
Net operating loss was $65.1 million for the quarter, or $0.16 per share, compared to a net operating loss of $38.6 million, or $0.10 per share, in the second quarter of 2000. The increase in net operating loss was driven primarily by the decline in media revenues and higher net interest expense. Operating EBITDA was negative $12.3 million for the quarter, an improvement of 23% from negative $15.9 million in the second quarter of 2000. The company’s consumer access, commercial and international segments, taken together, contributed positive operating EBITDA during the second quarter of 2001. The company expects these combined business segments to continue generating positive operating EBITDA in the third and fourth quarters of 2001, and expects its overall business to generate positive operating EBITDA by the fourth quarter of 2001 and for the second half of 2001 overall.
Net operating loss and operating EBITDA exclude non-operating costs and certain other items, including expenses for the amortization of goodwill and other intangible assets, cost and amortization of distribution agreements, equity share of losses of affiliated companies, write-down of investments and other assets, and restructuring charges associated with workforce reductions. These items totaled $281.1 million for the quarter. Of this amount, cash expenditures totaled less than $10 million, related primarily to severance payments for workforce reductions.
Net loss for the quarter, which includes all of the items specified above, was $346.3 million or $0.85 per share, compared to a loss of $668.3 million, or $1.69 per share, in the second quarter of 2000. The decrease in net loss compared to the year-ago period was driven primarily by reduced expenses for the amortization of goodwill and other intangible assets following write-downs of these assets in prior quarters.
Cash and marketable securities totaled $183.4 million at the end of the quarter, compared to $104.5 million as of March 31, 2001. Excite@Home successfully secured $185 million in the second quarter through the sale of convertible notes and through the restructuring of its optical fiber backbone agreement with AT&T. As announced in April, the company continues to pursue alternatives that would reduce its financial exposure to narrowband media operations, which continue to generate financial losses for the company. The company will need to raise additional funds before the end of 2001 to support its operations. Potential sources of additional funds may include sales of certain of the company’s media operations and financing transactions. If the company is unsuccessful at raising sufficient funds or sufficiently reducing expenses, this could have a material adverse impact on its operations and liquidity.
Commenting on the quarter, Excite@Home chairman and CEO Patti Hart said, Despite facing a number of tough challenges, we executed solidly this quarter, posting results in line with our targets and delivering ever-higher levels of network reliability and customer satisfaction. Demand for broadband services remains high, our access revenues continue to grow rapidly and we continue to work towards the break-even mark on operating EBITDA.
We are working quickly to reshape our company in order to lead the next phase of the growth in broadband, Hart continued. We are unique in our ability to deliver highly reliable broadband network services and applications, and we are focused on leveraging these capabilities to deliver a wider array of services to a broader set of customers.
