United Is Waltzing with Comcast

United Online (UNTD ) is one Internet service provider whose stock is not in the tank. A low-cost Web service provider that charges customers only $9.95 a month, United's "balance sheet and cash position are very strong," says Jonathan Cohen of JHC Capital Management in Greenwich, Conn., which has been buying shares--currently at 6.58, up from 2 on Sept. 21.

On Feb. 26, United scored a coup for an ISP: Comcast, the third-largest U.S. cable-TV operator, signed a pact with United to provide high-speed Net service over Comcast's cable systems--the first time for Comcast to offer a choice of ISP to its customers. "This makes United more than just a dial-up Internet service provider: It would also have broadband facilities--without having to ramp up its costs structure," says Cohen. He expects United to turn cash-flow positive by the end of fiscal 2002. Excluding the Comcast pact, United should produce revenues of $192 million for the year ending June 30, 2002, says Peter DeCarpio of Thomas Weisel Partners in San Francisco. He has a 12-month price target of 11 for the stock.

There is an added fillip to United: Some industry pros think Earthlink, the third-largest U.S. Internet service provider, with sales of $1.2 billion, is eyeballing United to widen its subscriber base and cut costs. United's cost in acquiring customers is $29 a head, compared with Earthlink's $175. Buying United would be the quickest way for Earthlink to get a cheaper method of adding subscribers, says one analyst.

By Gene G. Marcial

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