<PAGE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               ----------------

                                   FORM 10-Q
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

  For the quarterly period ended September 30, 1999.

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

   for the transition period from            to            .

                        COMMISSION FILE NUMBER 000-22697

                               ----------------

                              AT HOME CORPORATION
             (Exact name of Registrant as specified in its charter)

<TABLE>
 <S>                              <C>
            DELAWARE                                77-0408542
 (State or other jurisdiction of                 (I.R.S. Employer
 incorporation or organization)               Identification Number)
</TABLE>

                  450 BROADWAY STREET, REDWOOD CITY, CA 94063
          (Address of principal executive offices, including zip code)

                                 (650) 569-5000
              (Registrant's telephone number, including area code)

  FORMER NAME, FORMER ADDRESS, AND FORMER YEAR, IF CHANGED SINCE LAST REPORT:

                                 NOT APPLICABLE

                               ----------------

  Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X]  NO [ ]

<TABLE>
<CAPTION>
                                                                   AS OF
                                                              OCTOBER 31, 1999
                                                              ----------------
   <S>                                                        <C>
   Number of shares of Series A Common Stock outstanding:....   347,454,806
   Number of shares of Series B Common Stock outstanding:....    30,800,000
   Number of shares of Series K Common Stock outstanding:....     2,000,000
</TABLE>

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>

<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----

<S>                                                                        <C>
PART I  FINANCIAL INFORMATION

ITEM 1.  Condensed Consolidated Financial Statements--Unaudited...........   3

     Condensed Consolidated Balance Sheets--September 30, 1999 and
     December 31, 1998....................................................   3

     Condensed Consolidated Statements of Operations--Three and Nine
     Months Ended September 30, 1999 and 1998.............................   4

     Condensed Consolidated Statements of Cash Flows--Nine Months Ended
     September 30, 1999 and 1998..........................................   5

     Notes to Condensed Consolidated Financial Statements.................   6

ITEM 2.  Management's Discussion and Analysis of Financial Condition and
 Results of Operations....................................................  14

ITEM 3.  Quantitative and Qualitative Disclosures about Market Risk.......  43

PART II OTHER INFORMATION

ITEM 1.  Legal Proceedings................................................  44

ITEM 2.  Changes in Securities............................................  44

ITEM 3.  Defaults Upon Senior Securities..................................  44

ITEM 4.  Submission of Matters to a Vote of Security Holders..............  44

ITEM 5.  Other Information................................................  44

ITEM 6.  Exhibits and Reports on Form 8-K.................................  45

     Signatures...........................................................  46
</TABLE>

                                       2
<PAGE>

PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

                              AT HOME CORPORATION
                     CONDENSED CONSOLIDATED BALANCE SHEETS
                (in thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                     September 30, December 31,
                                                         1999          1998
                                                     ------------- ------------
<S>                                                  <C>           <C>
                      ASSETS                          (unaudited)
Current assets:
  Cash and cash equivalents........................   $  162,184     $300,702
  Short-term investments...........................      286,952      118,587
                                                      ----------     --------
    Total cash, cash equivalents and short-term
     investments...................................      449,136      419,289
  Accounts receivable, net.........................       44,699        6,358
  Related party receivables........................       14,088        4,300
  Other receivable.................................        3,895           --
  Prepaid expenses and other current assets........       23,539        3,381
                                                      ----------     --------
    Total current assets...........................      535,357      433,328
Property and equipment, net........................      163,456       49,240
Investments in affiliated companies................       19,279           --
Other investments..................................      154,357        8,527
Distribution agreements, net.......................      321,203      186,247
Goodwill and other intangibles assets, net.........    6,473,602       93,989
Other assets.......................................       37,339        9,300
                                                      ----------     --------
    Total assets...................................   $7,704,593     $780,631
                                                      ==========     ========
                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable.................................   $   39,593     $  7,100
  Related party liabilities........................       16,906        3,684
  Accrued compensation and related expenses........       14,913        2,505
  Customer deposits................................       23,291        5,164
  Accrued merger costs.............................       24,004           --
  Other accrued liabilities........................       39,421       12,506
  Capital lease and other financing obligations,
   current portion.................................       31,488       12,045
                                                      ----------     --------
    Total current liabilities......................      189,616       43,004
Convertible debentures.............................      234,519      229,344
Capital lease and other financing obligations, less
 current portion...................................       65,231       14,356
Other liabilities..................................        6,225           61
Commitments and contingencies
Stockholders' equity:
  Common stock, $0.005 par value
    Authorized shares--719,719,414
    Issued and outstanding shares--369,359,917 in
     1999
     and 246,545,734 shares in 1998................    8,145,341      719,676
  Deferred compensation............................       (2,088)      (2,880)
  Accumulated other comprehensive income...........       27,542        4,235
  Accumulated deficit..............................     (961,793)    (227,165)
                                                      ----------     --------
    Total stockholders' equity.....................    7,209,002      493,866
                                                      ----------     --------
    Total liabilities and stockholders' equity.....   $7,704,593     $780,631
                                                      ----------     --------
</TABLE>

                            See accompanying notes.

                                       3
<PAGE>

                              AT HOME CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                (in thousands, except per share data; unaudited)

<TABLE>
<CAPTION>
                                       Three Months Ended   Nine Months Ended
                                         September 30,        September 30,
                                       -------------------  -------------------
                                         1999       1998      1999       1998
                                       ---------  --------  ---------  --------
<S>                                    <C>        <C>       <C>        <C>
Revenues (1).........................  $ 112,562  $ 13,815  $ 208,202  $ 28,808
Cost and expenses (2):
  Operating costs....................     45,260    12,256     92,944    30,969
  Product development and
   engineering.......................     16,834     4,588     34,581    12,052
  Sales and marketing................     48,179     4,978     81,129    12,834
  General and administrative.........      9,028     3,112     19,554     8,911
  Costs and amortization of
   distribution agreements...........     43,932    13,628     77,655    46,790
  Amortization of goodwill and other
   intangible assets.................    446,647       --     606,751       --
  Purchased in-process research and
   development.......................        --        --      34,400       --
  Costs of business combination......        922       --      12,603       --
                                       ---------  --------  ---------  --------
    Total costs and expenses.........    610,802    38,562    959,617   111,556
                                       ---------  --------  ---------  --------
Loss from operations.................   (498,240)  (24,747)  (751,415)  (82,748)
Interest and other income, net.......      2,556     1,460     20,405     3,473
Equity in losses of affiliated
 companies...........................     (2,876)      --      (3,618)      --
                                       ---------  --------  ---------  --------
Net loss.............................  $(498,560) $(23,287) $(734,628) $(79,275)
                                       =========  ========  =========  ========
Basic and diluted net loss per
 share...............................  $   (1.37) $  (0.10) $   (2.47) $  (0.35)
                                       =========  ========  =========  ========
Shares used in net loss per share
 calculations........................    362,885   230,146    297,002   226,178
                                       =========  ========  =========  ========
(1) Revenues from related parties....  $   8,916  $  2,914  $  21,321  $  6,086
                                       =========  ========  =========  ========
(2) Depreciation and amortization of
  property and equipment and deferred
  compensation included in costs and
  expenses...........................  $  15,293  $  3,965  $  31,563  $ 10,303
                                       =========  ========  =========  ========
</TABLE>

                            See accompanying notes.

                                       4
<PAGE>

                              AT HOME CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (in thousands; unaudited)

<TABLE>
<CAPTION>
                                                           Nine Months Ended
                                                             September 30,
                                                          --------------------
                                                             1999       1998
                                                          ----------  --------
<S>                                                       <C>         <C>
Cash provided by (used in) operating activities:
Net loss................................................. $ (734,628) $(79,275)
 Adjustments to reconcile net loss to net cash provided
  by (used in) operating activities:
  Amortization of deferred compensation and other non-
   cash compensation.....................................      8,692       765
  Depreciation and amortization..........................     30,771     9,538
  Costs and amortization of distribution agreements......     77,655    46,790
  Amortization of goodwill and other intangible assets...    606,751        --
  Accretion of discount on convertible debentures........      5,175        --
  Recognized non-cash gain on investment.................    (12,558)       --
  Purchased in-process research and development..........     34,400        --
  Equity in losses of affiliated companies...............      3,618        --
 Changes in assets and liabilities:
    Accounts receivable..................................    (25,697)   (5,794)
    Other assets.........................................     (2,924)   (4,739)
    Accounts payable.....................................     23,251     4,019
    Other liabilities....................................     30,624     1,082
    Customer deposits....................................      9,867     3,113
                                                          ----------  --------
      Net cash provided by (used in) operating
       activities........................................     54,997   (24,501)
Cash used in investing activities:
 Purchases of investments................................   (355,198)  (86,055)
 Sales and maturities of investments.....................    155,664    63,613
 Purchases of property, equipment and improvements.......    (46,079)  (11,751)
 Acquisition of Excite, net of cash received.............     34,341        --
                                                          ----------  --------
      Net cash used in investing activities..............   (211,272)  (34,193)
Cash flows provided by financing activities:
 Proceeds from issuance of common stock..................     39,006   128,297
 Payments on capital lease and other financing
  obligations............................................    (21,249)   (8,979)
 Repayment of notes receivable from stockholders.........         --       294
                                                          ----------  --------
      Net cash provided by financing activities..........     17,757   119,612
                                                          ----------  --------
Net (decrease) increase in cash and cash equivalents.....   (138,518)   60,918
Cash and cash equivalents at beginning of period.........    300,702    44,213
                                                          ----------  --------
Cash and cash equivalents at end of period............... $  162,184  $105,131
                                                          ==========  ========
Non-cash financing activities:
 Issuance of common stock in connection with the
  acquisition of Excite.................................. $7,165,646  $     --
                                                          ==========  ========
 Issuance of common stock warrants in connection with
  distribution agreements................................ $  187,588  $ 83,320
                                                          ==========  ========
 Issuance of common stock warrants to joint venture
  partner................................................ $    2,112  $     --
                                                          ==========  ========
 Property and equipment acquired under capital leases and
  other financing obligations............................ $   47,155  $  8,969
                                                          ==========  ========
Supplemental cash flow disclosure:
 Cash paid for interest.................................. $    9,170  $  1,676
                                                          ==========  ========
</TABLE>

                            See accompanying notes.

                                       5
<PAGE>

                              AT HOME CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                  (unaudited)

1. Summary of Significant Accounting Policies

 The Business

   At Home Corporation ("Excite@Home" or "the Company"), incorporated in the
state of Delaware on March 28, 1995, is a global media company that provides
consumers with high speed, high bandwidth Internet connectivity and content and
interactive services available on multiple bandwidth platforms. Our @Home
service provides broadband Internet access from consumers' homes over the cable
television infrastructure and offers end-to-end managed connectivity services
for businesses over both cable and digital telecommunications lines. Our media
and marketing services include the Excite Network, a leading consumer Internet
portal and MatchLogic, a targeted advertising platform. The Excite Network
offers search, content, community, communications services and commerce
functionality to Internet users. Excite's media services focus on comprehensive
navigation, global reach and personalization technology to attract and retain
users and achieve market share. MatchLogic, a subsidiary of Excite, is a
proprietary advertising distribution platform, that provides advertisers with
targeted ad campaign management designed to improve the effectiveness of their
advertising campaigns.

 Basis of Presentation

   The unaudited condensed consolidated financial statements reflect all
adjustments consisting of normal recurring accruals, which are, in the opinion
of management, necessary for a fair presentation of the interim periods
presented. All significant intercompany transactions and balances have been
eliminated in consolidation. The results of operations for the three and nine
months ended September 30, 1999 are not necessarily indicative of the results
to be expected for any subsequent quarter or for the entire year ending
December 31, 1999. Certain information and disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the Securities and
Exchange Commission's rules and regulations. These unaudited condensed
consolidated financial statements and notes included herein should be read in
conjunction with the Company's audited consolidated financial statements and
notes as included in the Company's Annual Report on Form 10-K/A for the year
ended December 31, 1998 as filed with the Securities and Exchange Commission on
April 27, 1999.

 Use of Estimates

   The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the consolidated financial
statements and accompanying notes. Actual results may differ from those
estimates.

 Revenue Recognition

   Monthly customer subscription revenue for the @Home and @Work services is
recognized in the period in which subscription services are provided. The
Company also earns revenue from cable system operators for providing certain
support services, such as customer support, local area content development and
pre-commercial deployment fees. Revenue from cable system operators is
recognized as the services are performed. The Company has also entered into
agreements with U.S. cable stockholders for the development, deployment and
marketing of additional services. Revenues for these development agreements are
recognized on the percentage of completion basis.

   Revenues also include on-line advertising revenues which are derived
principally from short-term advertising contracts in which the Company
guarantees a minimum number of impressions (a view of an

                                       6
<PAGE>

advertisement by a consumer) for a fixed fee. The Company also enters into a
number of longer-term advertising and e-commerce sponsorship agreements. Under
these agreements, the Company earns fees for initial programming, initiation
of service and for generating impressions, which in some instances are
guaranteed. These revenues, as well as contract and other revenues, which
include ad serving and targeting revenues, are generally recognized ratably
over the term of the agreements, provided that the Company does not have any
significant remaining obligations and collection of the resulting receivable
is probable. To the extent that impression deliveries do not meet the
guarantees, the Company defers recognition of the corresponding revenues.

   Revenues from the exchange of advertising services for advertising in other
media are recognized during the period in which the services are provided and
are recorded at the fair value of the services provided.

 Segment Reporting

   Since the Company's acquisition of Excite in May 1999, the Company operates
in two significant business segments, media and advertising services and
subscriber network services. For internal reporting purposes the Company
separately reports revenues primarily for these two segments as presented in
Note 7. Costs and expenses, loss from operations, net loss and assets and
liabilities are not reported by business segment.

 Stock Split

   In May 1999, the Company's stockholders approved a two-for-one split of the
Company's common stock, which occurred on June 16, 1999 to stockholders of
record on June 2, 1999. All of the common stock share and per share data have
been adjusted to retroactively reflect this stock split.

 Per Share Data

   Basic and diluted net loss per share is computed using the weighted average
number of common shares outstanding during the period. The effect of all
convertible debt, warrants and employee stock options has been excluded from
the computation of diluted loss per share because all such securities are
anti-dilutive for all periods presented. The following table sets forth the
computation of basic and diluted loss per share:

<TABLE>
<CAPTION>
                                      Three Months Ended   Nine Months Ended
                                        September 30,        September 30,
                                      -------------------  -------------------
                                        1999       1998      1999       1998
                                      ---------  --------  ---------  --------
                                      (in thousands, except per share data)
<S>                                   <C>        <C>       <C>        <C>
Net loss............................. $(498,560) $(23,287) $(734,628) $(79,275)
                                      =========  ========  =========  ========
  Weighted average shares
   outstanding.......................   368,430   240,642    303,131   238,314
  Weighted average shares issued and
   outstanding subject to repurchase
   agreements........................    (5,545)  (10,496)    (6,129)  (12,136)
                                      ---------  --------  ---------  --------
Shares used in net loss per share
 calculations........................   362,885   230,146    297,002   226,178
                                      =========  ========  =========  ========
Basic and diluted net loss per
 share............................... $   (1.37) $  (0.10) $   (2.47) $  (0.35)
                                      =========  ========  =========  ========
</TABLE>

 Reclassifications

   Certain previously reported amounts have been reclassified to conform to
the current year's presentation.

2. Business Combination--Excite, Inc.

   On May 28, 1999, the Company completed its acquisition of Excite, Inc.
("Excite") a publicly-held global Internet media company that offered
consumers and advertisers comprehensive Internet navigation services with
personalization capabilities and specializes in the delivery of targeted
marketing solutions through

                                       7
<PAGE>

its subsidiary MatchLogic, Inc. ("MatchLogic"). The acquisition was
accomplished through a merger of Excite with and into a wholly-owned subsidiary
of the Company. The total purchase consideration of approximately $7,231
million was based on: the fair value of the Company's Series A common stock
issued; stock option, stock purchase plan and warrant obligations assumed; and
merger-related costs. At the closing, the Company issued approximately 116
million shares of its Series A common stock valued at approximately $6,051
million as of the announcement date, based on an exchange ratio of 2.083804
shares of the Company's Series A common stock for each outstanding share of
Excite common stock, adjusted to reflect the two-for-one split of the Company's
common stock on June 16, 1999. The Company assumed outstanding options to
purchase Excite common stock, which were converted into options to acquire
approximately 26 million shares of the Company's Series A common stock, with a
fair value of approximately $1,105 million, based on the same exchange ratio,
subject to the terms and conditions, including exercisability and vesting
schedules, of the original options. The Company also assumed outstanding
warrants and debt instruments convertible into approximately 232,000 shares of
Excite common stock, with a fair value of approximately $10 million, which were
converted into warrants and debt instruments that may be converted into the
Company's Series A common stock according to the same exchange ratio. In
addition, the Company incurred merger-related costs of approximately $65
million, which were included in the purchase consideration. These merger
related costs primarily consisted of investment banking fees, severance and
stock compensation to certain employees and other professional fees.

   This transaction was accounted for as a purchase. Accordingly, the total
purchase consideration of $7,231 million was allocated to the estimated fair
value of the assets acquired and liabilities assumed based on their estimated
fair values as of the date of the acquisition. Goodwill and other intangible
assets are being amortized on a straight-line basis over approximately four
years.

 Purchase Price Allocation

   The purchase consideration was allocated to the assets acquired and
liabilities assumed based on fair values as follows (in millions):

<TABLE>
       <S>                                                               <C>
       Current Assets................................................... $  180
       Goodwill.........................................................  6,727
       Other intangibles assets.........................................    257
       Other non-current assets.........................................    139
       Purchased in-process research and development....................     34
       Liabilities assumed..............................................   (106)
                                                                         ------
           Total purchase consideration................................. $7,231
                                                                         ======
</TABLE>

 Purchased In-Process Research and Development

   Approximately $34.4 million was allocated to in-process research and
development and charged to operations at the time of acquisition. The in-
process research and development value was determined by identifying the
research projects for which technological feasibility had not been achieved and
assessing the date of completion of the research and development effort. The
state of completion was determined by estimating the costs and time incurred to
date relative to those costs and time to be incurred to develop the in-process
technology into commercially viable products. The estimated discounted net cash
flows included only net cash flows resulting from the percentage of research
and development efforts complete at the end of the date of acquisition. The
discount rate included a factor that took into account the uncertainty
surrounding the successful development of the in-process technology projects.

   To determine the value of purchased technology, the expected future cash
flows of the existing developed technologies were discounted taking into
account the characteristics and applications of the product, the size of
existing markets, growth rates of existing and future markets as well as an
evaluation of past and anticipated

                                       8
<PAGE>

product-life cycles. In addition, other intangible assets were valued which
includes agreements, trademarks, workforce and data.

 Pro Forma Results of Operations

   The following unaudited pro forma condensed financial information presents
the combined results of operations of the Company and Excite, including the
amortization of goodwill and other intangible assets and a charge for in-
process research and development, as if the acquisition had occurred at the
beginning of each period presented.

<TABLE>
<CAPTION>
                                                         Nine Months Ended
                                                           September 30,
                                                      ------------------------
                                                         1999         1998
                                                      -----------  -----------
                                                       (in thousands, except
                                                      per share information)
<S>                                                   <C>          <C>
Pro forma revenues................................... $   291,742  $   128,818
                                                      ===========  ===========
Pro forma net loss................................... $(1,506,534) $(1,476,270)
                                                      ===========  ===========
Pro forma basic and diluted net loss per share....... $     (4.18) $     (4.32)
                                                      ===========  ===========
Shares used in pro forma per share calculations......     360,306      341,617
                                                      ===========  ===========
</TABLE>

   The pro forma results of operations are not necessarily indicative of the
results that would have occurred had the merger occurred at the beginning of
each year presented, and are not intended to be indicative of future results of
operations.

3. Investments in Affiliated Companies

   In May 1999, in connection with the acquisition of Excite, approximately
$21.0 million of the purchase price was allocated to investments of Excite's
affiliated companies based on the fair value of these investments at the date
of acquisition. Investments in affiliated companies represent investments in
joint ventures and privately held companies, including a joint venture with
Rogers Media, Inc., a related party. The Company's equity interest in these
affiliated companies ranges from 22% to 50%. These investments are accounted
for under the equity method. The equity losses of affiliated companies for the
three and nine months ended September 30, 1999 were $2.9 million and $3.6
million, respectively, which represents the Company's share of the losses in
the joint ventures and privately held companies.

 At Home Australia

   In June 1999, the Company and Optus Vision Pty Ltd. ("Optus") entered into a
joint venture agreement to form At Home Network Australia Pty Ltd. ("At Home
Australia"). At Home Australia, which is owned 50% by the Company and 50% by
Optus. At Home Australia will conduct a business consisting of the production,
packaging, marketing, distribution and support of the Company's broadband
Internet service for delivery to residential, small office and home office
customers in Australia. The Company and Optus have committed to provide initial
start-up capital for the venture, and the Company will also provide the core
technology, related services and brand name. In addition, through a separate
management services agreement, the Company has agreed to provide certain
consulting services to At Home Australia for which the Company will be
reimbursed on a cost plus basis. The Company and Optus will each initially
contribute a total of approximately $2.6 million (or 4 million Australian
Dollars) to At Home Australia and each may be additionally required to
contribute approximately $18.3 million (or 28 million Australian Dollars). The
Company may elect to bring additional partners into the joint venture to fund
its commitments to At Home Australia.

                                       9
<PAGE>

The Company accounts for its interest in the joint venture under the equity
method.

 At Home Japan

   On August 26, 1999, the Company, Jupiter Telecommunications Co., Ltd. ("J-
COM") and Sumitomo Corporation ("SC") entered into a joint venture agreement to
form At Home Japan Limited ("At Home Japan"). At Home Japan is indirectly owned
43% by the Company, 36% by J-COM and 21% by SC. At Home Japan will conduct a
business consisting of the production, packaging, marketing, distribution and
support of the Company's broadband Internet service for delivery to
residential, small office and home office customers in Japan. The Company has
licensed to At Home Japan certain of its core technologies for the Company's
broadband Internet Service and brand name and in addition, through a separate
management services agreement, has agreed to provide certain consulting
services to At Home Japan for which the Company will be reimbursed on a cost
plus basis. Each of At Home, J-COM and SC have agreed to contribute their pro-
rata share of up to a maximum of approximately $74.9 million (or 7.8 billion
Yen), which funds, if required, may be drawn upon in such amount and at such
times as determined by the board of directors of At Home Japan. The Company's
pro-rata funding obligations to At Home Japan are approximately $32.6 million
(or 3.4 billion Yen). Under certain circumstances, the Company may sell up to
fifty percent of its interest in At Home Japan. The Company accounts for its
interest in At Home Japan under the equity method.

   In connection with the joint venture agreement with J-COM and SC, the
Company issued performance based warrants to purchase a total of 600,000 and
300,000 shares, respectively, of its Series A common stock at an exercise price
of $32.50 per share. These warrants become exercisable if and when J-COM or SC
meet certain subscriber and other milestones. As of September 30, 1999, these
warrants were exercisable as to 100,000 shares. The Company recorded $2.1
million as an additional non-cash investment in the joint venture based on the
fair value of the exercisable warrants.

 At Home Solutions

   In May 1999, the Company and Motorola, Inc. invested in a joint venture
known as At Home Network Solutions, Inc. ("Solutions"). On July 16, 1999, Cisco
Systems, Inc. and General Instrument Corporation also invested in Solutions.
Currently, the Company owns approximately 46% of Solutions and each of
Motorola, Cisco and General Instrument (collectively, the "Stockholders") owns
approximately 18% of Solutions. The business of Solutions consists of the
production, packaging, marketing, distribution and support of the Company's
broadband Internet service for delivery by small and medium sized cable
operators to residential, small office and home office customers in the United
States. In connection with the formation of Solutions, the Company has licensed
to Solutions certain of its core technologies, related services and brand name.
The Company accounts for its interest in Solutions under the equity method.

                                       10
<PAGE>

   The Company has an option, for a three-year period commencing April 1, 2002,
to purchase the interest owned by each of the Stockholders in Solutions at its
then fair market value. If the Company does not exercise the purchase option,
each Stockholder will have the right to sell its interest in Solutions to the
other Stockholders, or the Stockholders collectively will have the right to
require Solutions to register the sale of their interests to the public or
collectively to purchase the Company's interest in Solutions for a nominal
price.

4. Other Investments

   As of September 30, 1999, other investments totaled $154.3 million. During
the nine months ended September 30, 1999, the Company invested approximately
$52.0 million in equity instruments of privately and publicly held companies.
In addition, the Company acquired approximately $60 million of other
investments in connection with the acquisition of Excite in May 1999. The
Company owns less than a 20% equity interest in any of these companies and does
not have the ability to exercise significant influence. Investments in
privately-held companies are accounted for under the cost method of accounting.
Unrealized gains and losses on investments in publicly held companies are
presented as a component of accumulated other comprehensive income.

   In February 1999, the Company recorded a $12.6 million one-time gain on an
investment in a privately held company due to the investee being acquired for
common stock by a publicly traded company.

5. Commitments and Contingencies

   In December 1998, the Company entered into an agreement with AT&T to create
a nationwide network utilizing AT&T's backbone. At September 30, 1999, the
Company had payments remaining of $34.0 million in 1999 and $45.0 million in
2000.

   Sheldon Pittleman and Ralph Zonies each filed derivative lawsuits on behalf
of the Company against AT&T and Messrs. Armstrong, Petrillo, Roberts, Woodrow,
Doerr, Hearst, Bell, Malone, Shaw and Jermoluk, who are the Company's
directors, in the Court of Chancery of the State of Delaware on October 15,
1999. The Company is named as a nominal defendant in each complaint. Each
complaint alleges breaches of fiduciary duty to the Company and its public
stockholders. As of the date of this report, the Company had not yet filed
responsive pleadings in either matter. Mr. Pittleman and Mr. Zonies each seeks
an injunction requiring the Company to alter its corporate governance,
including appointing new, unaffiliated directors, damages, costs and attorneys'
fees.

   GTE Internetworking Incorporated and GTE Intelligent Network Services
Incorporated filed a lawsuit against TCI, Comcast Corporation and the Company
in the United States District Court for the Western District of Pennsylvania on
October 25, 1999. The complaint alleges violations of the federal antitrust
laws. GTE is seeking an injunction prohibiting continued performance under the
Company's exclusive arrangements with its cable partners, damages, costs and
attorneys' fees. Although the Company has not yet filed responsive pleadings in
this matter, the Company intends to defend itself vigorously. However, if the
Company does not prevail in this action, its cable partners, when providing
high speed data transport to residential consumers, may be required to offer
the services of other Internet service providers in addition to the @Home
service. The Company may also be required to pay substantial damages. Either of
these results could seriously harm the Company's business, and could encourage
others to initiate litigation on similar legal theories in the future.

   The Company cannot assure that it will prevail in any litigation. Regardless
of the outcome, any litigation may require the Company to incur significant
litigation expenses and may result in significant diversion of management. An
unfavorable outcome may have material adverse effect on the Company's financial
position or results of operations.

                                       11
<PAGE>

6. Stockholders' Equity

   In October 1997, the Company entered into a distribution agreement with
Cablevision Systems Corporation ("Cablevision"), and certain related entities.
The exclusivity obligations in favor of the Company expire in June 2002, and
may be terminated sooner under certain circumstances. These exclusivity
obligations also are subject to exceptions that would permit Cablevision to
engage in certain activities, which may compete, directly or indirectly, with
the activities of the Company.

   The agreement provided for the issuance to Cablevision and certain related
entities of a warrant to purchase up to 15,751,568 shares of the Company's
Series A common stock at an exercise price of $0.25 per share (the "Warrant").
The Warrant was immediately exercisable, subject to the receipt of all
necessary governmental consents or approvals, all which have been obtained.
During the year ended December 31, 1997, the Company recorded the fair value of
the Warrant, $172.6 million as distribution agreements, which is being
amortized ratably over 56 months, the remaining term of the exclusivity
obligations. The Agreement also provided for the issuance of an additional
warrant to Cablevision and CSC Parent to purchase up to 6,142,304 shares of the
Company's Series A common stock at an exercise price of $0.25 per share under
certain conditions (the "Contingent Warrant"). The Contingent Warrant is
exercisable and becomes exercisable as and to the extent certain cable
television systems are transferred from AT&T and its controlled affiliates to
Cablevision and certain related entities. During the year ended December 31,
1998, the Contingent Warrant became exercisable for 4,711,028 shares of Series
A common stock. The Company recorded the fair value of the Contingent Warrant,
$74.5 million as distribution agreements, which is being amortized ratably over
51 months, of the then remaining term of the exclusivity obligations. As of
September 30, 1999 and December 31, 1998, accumulated amortization of the
distribution agreement related to Cablevision totaled $101.7 million and $60.8
million, respectively.

   In connection with distribution agreements with Rogers Cablesystems Limited
("Rogers") and Shaw Cablesystems Limited ("Shaw") in March 1998, the Company
issued performance based warrants to purchase a total of 10,000,000 shares of
its Series A common stock at an exercise price of $5.25 per share. These
warrants become exercisable if and when Rogers or Shaw meet certain subscriber
milestones. As of September 30, 1999, these warrants were exercisable as to
1,846,760 shares. In connection with these distribution agreements the Company
recorded non-cash charges to operations of $23.2 million and $69.9 million for
the three and nine months ended September 30, 1999, respectively.

   In connection with distribution agreements with certain other cable
operations, the Company issued performance based warrants, in May and June 1998
and January and March 1999 to purchase a total of 10,544,200 and 6,060,000
shares, respectively, of its Series A common stock at an exercise price of
$5.25 to $23.13 per share. In the event and to the extent the performance
milestones are met, the Company will record the fair value of the warrants as
distribution agreements in future periods. The distribution agreements will be
amortized ratably over the remaining term of the respective exclusivity
agreement. During the nine months ended September 30, 1999, warrants to
purchase 1,951,486 shares became exercisable. The Company recorded the fair
value of the warrants totaling $187.6 million as distribution agreements, which
is being amortized over the remaining life of the distribution agreements,
approximately five years. As of September 30, 1999, accumulated amortization of
the distribution agreement totaled $11.9 million.

7. Revenues

<TABLE>
<CAPTION>
                                                 Three Months     Nine Months
                                               Ended September  Ended September
                                                     30,              30,
                                               ---------------- ----------------
                                                 1999    1998     1999    1998
                                               -------- ------- -------- -------
                                                        (in thousands)
<S>                                            <C>      <C>     <C>      <C>
Revenues:
  Media and advertising services.............. $ 75,610 $ 1,714 $121,514 $ 3,239
  Subscriber network and other services.......   36,952  12,101   86,688  25,569
                                               -------- ------- -------- -------
  Total revenues.............................. $112,562 $13,815 $208,202 $28,808
                                               ======== ======= ======== =======
</TABLE>

                                       12
<PAGE>

   Revenues from related parties include revenues earned for consulting
services rendered to our joint ventures, reimbursed on a cost plus basis, and
revenues from cable system operators for development fees for set-top devices
and @Work services and for providing support services, such as customer
support, local area content and pre-commercial deployment fees. Revenues from
related parties were $8.9 million and $21.3 million for the three and nine
months ended September 30, 1999, respectively, and $2.9 million and $6.1
million for the comparable periods in 1998. Revenues earned for consulting
services rendered to our joint ventures totaled $3.0 million and $6.2 million
for the three and nine months ended September 30, 1999, respectively, and for
the comparable periods in 1998 were not significant.

   The Company has made strategic investments in several companies, some of
which the Company expects to earn revenues equal to or in excess of its cash
investment. Revenues from these companies were $5.7 million and $13.4 million
for the three and nine months ended September 30, 1999, respectively. Revenues
from these companies were $482,000 for the three and nine months ended
September 30, 1998.

   Revenues from the exchange of media and advertising services for advertising
in other media were less than 10% of total revenues for the three and nine
months ended September 30, 1999 and 1998. Revenues from these exchanges are
recorded at the fair value of the services provided.

8. Comprehensive Loss

   The components of the Company's comprehensive loss for each period presented
are as follows:

<TABLE>
<CAPTION>
                                  Three Months Ended     Nine Months Ended
                                    September 30,          September 30,
                                 ---------------------  ---------------------
                                    1999       1998        1999       1998
                                 ----------  ---------  ----------  ---------
                                              (in thousands)
<S>                              <C>         <C>        <C>         <C>
Net loss........................ $ (498,560) $ (23,287) $ (734,628) $ (79,275)
Unrealized gain (loss) on
 investments....................    (46,426)    (2,037)     23,305        938
                                 ----------  ---------  ----------  ---------
Comprehensive loss.............. $ (544,986) $ (25,324) $ (711,323) $ (78,337)
                                 ==========  =========  ==========  =========
</TABLE>

9. Subsequent Events

 Pending Acquisition of Bluemountain.com

   On October 23, 1999, the Company and Hartford House, Ltd. a Delaware
corporation ("Hartford House"), the operator of the Bluemountain.com web site,
entered into a merger agreement. Bluemountain.com provides web-based greeting
cards. In the merger, the Company will pay $350 million in cash and issue
shares of the Company's newly-created non-voting convertible preferred stock
valued at approximately $430 million to the stockholders of Hartford House. The
preferred stock will be automatically convertible into approximately 11 million
shares of the Company's Series A common stock as the restrictions on resale
lapse. The Company will assume options to purchase shares of Hartford House
common stock, which will become exercisable for shares of our Series A common
stock. This acquisition will be accounted for as a purchase.

   If the Bluemountain.com web site achieves certain performance goals, the
Company will be obligated to issue additional shares of the Company's Series A
common stock to Hartford House stockholders having a total value of up to $270
million and will issue additional shares to be allocated to holders of assumed
or exercised Hartford House stock options.

 Acquisition of iMALL

   On October 27, 1999, the Company completed the acquisition of iMALL, Inc., a
Nevada corporation ("iMALL"), for an aggregate of approximately 9.4 million
shares of Series A common stock with an approximate fair value of $347 million.
The Company also assumed iMALL's outstanding options and warrants and issued to
First Data Corporation, a former stockholder of iMALL, a warrant to purchase
2.3 million shares of the Company's Series A common stock at an exercise price
of $36.96 per share. This warrant will expire on October 30, 2003. iMALL
provides electronic commerce services and solutions to small and medium-sized
businesses, enabling them to sell their products over the Internet. This
acquisition will be accounted for as a purchase.

                                       13
<PAGE>

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations

   This quarterly report contains forward-looking statements relating to future
events or financial results, such as statements indicating that "we believe,"
"we expect" or "we anticipate" that events may occur or trends may continue,
and similar statements relating to future events or financial results. These
forward-looking statements are subject to risks and uncertainties as indicated
under the caption "Risk Factors." Actual results could vary materially as a
result of a number of factors including those discussed in "Risk Factors" and
elsewhere in this report.

Overview

   At Home Corporation, or "Excite@Home" is a global media company that
provides consumers with high speed, high bandwidth Internet connectivity and
content and interactive services available on multiple bandwidth platforms. Our
@Home service provides broadband Internet access from consumers' homes over the
cable television infrastructure and offers end-to-end managed connectivity
services for businesses over both cable and digital telecommunications lines.
Our media and marketing services include the Excite Network, a leading consumer
Internet portal and MatchLogic, a targeted advertising platform. The Excite
Network offers search, content, community, communications services and commerce
functionality to Internet users. Excite's media services focus on comprehensive
navigation, global reach and personalization technology to attract and retain
users and achieve market share. MatchLogic, a subsidiary of Excite, is a
proprietary advertising distribution platform, that provides advertisers with
targeted ad campaign management designed to improve the effectiveness of their
advertising campaigns.

Media and Advertising Services

   The Excite Network contains a rich suite of specialized narrowband and
broadband information services, organized under numerous topical channels that
combine proprietary search technology as well as content, community features
and information management services. The Excite Network has consistently ranked
as one of the top ten destinations on the Internet and during September 1999,
reached over 15 million unique users and delivered over 89 million average
daily page views as reported by Media Metrix. We provide our consumers
compelling broadband content from our content partners which include Intuit,
Sportsline, Tickets.com and WebMD. For advertisers, we offer a variety of
broadband and narrowband advertising options including banner advertising and
sponsorships, allowing them to develop an advertising plan designed to optimize
their reach, frequency of exposure and consumer response.

Subscriber Network Services

   We are the leading provider of broadband Internet services over the cable
television infrastructure to consumers, with over 840,000 subscribers worldwide
as of September 30, 1999. The @Home service enables subscribers to access all
Internet content and services at transmission speeds of up to 50 times faster
than typical 56.6 kilobits per-second dial-up connections, provides an "always
on" connection and delivers rich multimedia programming. The service allows
subscribers to connect to our proprietary network, a high-speed "parallel"
Internet, via cable modem. The foundation of the @Home service is our scalable,
distributed intelligent network architecture that optimizes traffic routing,
improves security and consistency of service and facilitates end-to-end network
management. Our network consists of a dedicated, national, high bandwidth,
fiber optic backbone and local hybrid fiber coaxial, or HFC, cable networks,
owned and operated by our cable affiliates, which connect to our backbone at
the cable head-end. Through our relationships with 23 cable partners, we have
access to over 72 million homes worldwide as of September 30, 1999. Of these
homes, approximately 21 million were passed by upgraded two-way cable capable
of carrying our broadband service. Our cable partners currently include AT&T,
Comcast Corporation, Cox Communications, Cablevision Systems Corp., Rogers
Cablesystems Limited, Shaw Cablesystems Limited and others.

   We offer our @Work service which, offers commercial customers high-speed
end-to-end managed connectivity, Web hosting, virtual private networking and
telecommuting over digital telecommunications

                                       14
<PAGE>

lines, HFC cable and digital subscriber lines, leveraging the same national
transport facilities and other infrastructure as is used by the @Home service.
As of September 30, 1999, we were providing @Work Internet services to
approximately 4,200 customers.

 Proposed Acquisition of Bluemountain.com

   On October 23, 1999, Excite@Home and Hartford House, Ltd. a Delaware
corporation ("Hartford House"), the operator of the Bluemountain.com web site,
entered into an Agreement and Plan of Merger. The Company will issue shares of
its newly-created non-voting convertible preferred stock, convertible into
approximately 11 million shares of Series A common stock and pay $350.0 million
in cash to the stockholders of Hartford House and Hartford House will merge
into Excite@Home. The preferred stock will be automatically convertible into
our Series A common stock as restrictions on resale lapse. We will assume
options to purchase shares of Hartford House common stock. The merger is
subject to customary closing conditions, including regulatory approvals. This
acquisition will be accounted for as a purchase.

   If certain performance goals related to the Bluemountain.com web site are
met, we will be obligated to issue additional shares of our Series A common
stock to Hartford House stockholders having an aggregate value of up to $270.0
million and will issue additional shares to be allocated to holders of assumed
or exercised Hartford House stock options.

 Acquisition of iMALL, Inc.

   On October 27, 1999, we completed the acquisition of iMALL, Inc., a Nevada
corporation, for an aggregate of approximately 9.4 million shares of our Series
A common stock. We also assumed iMALL's outstanding options and warrants and
issued to First Data Corporation a warrant to purchase 2,300,000 shares of our
Series A common stock at an exercise price of $36.96 per share. This warrant
will expire on October 30, 2003. iMALL provides electronic commerce services
and solutions to small and medium-sized businesses enabling them to sell their
products over the Internet. This acquisition will be accounted for as a
purchase.

Results of Operations

 Revenues

<TABLE>
<CAPTION>
                                                 Three Months     Nine Months
                                                    Ended            Ended
                                                September 30,    September 30,
                                               ---------------- ----------------
                                                 1999    1998     1999    1998
                                               -------- ------- -------- -------
                                                        (in thousands)
<S>                                            <C>      <C>     <C>      <C>
Revenues:
  Media and advertising services.............. $ 75,610 $ 1,714 $121,514 $ 3,239
  Subscriber network and other services.......   36,952  12,101   86,688  25,569
                                               -------- ------- -------- -------
    Total revenues............................ $112,562 $13,815 $208,202 $28,808
                                               ======== ======= ======== =======
</TABLE>

   Revenues consist of revenues earned from media and advertising services and
subscriber network and other services. Media and advertising revenues primarily
consist of revenues from advertising, sponsorship commerce agreements and ad
serving and targeting revenues. Subscriber network and other revenues consist
primarily of monthly customer subscription revenues from the @Home and @Work
services and revenues from cable system operators for providing support
services, such as customer support, local area content development and pre-
commercial deployment fees. Other services include consulting services provided
to our international joint ventures on a cost plus basis and revenues from
cable system operators for development fees for set-top devices and @Work
services and for providing support services, such as customer support, local
area content, and pre-commercial deployment fees.

                                       15
<PAGE>

 Media and advertising revenues

   Media and advertising revenues increased to $75.6 million, or 67% of total
revenues, for the three months ended September 30, 1999, from $1.7 million, or
12% of total revenues, for the comparable period of the prior year. Current
year to date media and advertising revenues increased to $121.5 million, or 58%
of total revenues, from $3.2 million, or 11% of total revenues, for the
comparable period of the prior year. The revenue growth during 1999 was
primarily attributable to the Excite acquisition. As a result of the
acquisition, the traffic on our Internet portals increased to 89 million
average daily page views at September 30, 1999 from less than one million for
the comparable period in 1998. In addition, the number of advertisers on our
Internet portals increased to 2,000 at September 30, 1999 from 40 for the
comparable period in 1998. The increase in the number of average daily page
views and the number of advertisers on our Internet portals allowed us to
substantially increase our narrowband and broadband media and advertising
revenues, which were entirely dependent on broadband revenues during 1998. The
traffic on our Internet portals increased 10% and our number of advertisers
increased 15% from June 30, 1999 to September 30, 1999. We do not believe that
it is appropriate to compare our media and advertising revenues from periods
subsequent to May 1999 with periods ending prior to that time. In addition, you
should not rely upon increases in these revenues from periods prior to May 28,
1999 as an indication of future performance.

 Subscriber network and other revenues

   Subscriber network and other revenues increased to $37.0 million, or 33% of
total revenues, for the three months ended September 30, 1999, from $12.1
million, or 88% of total revenues, for the comparable period of the prior year.
Current year to date subscriber network and other revenues increased to $86.7
million, or 42% of total revenues, from $25.6 million, or 89% of total
revenues, for the comparable period of the prior year.

   Subscriber network and other revenues from the @Home service during the
three and nine months ended September 30, 1999 increased from the comparable
periods of the prior year as our @Home subscriber base increased 300% to
840,000 at September 30, 1999 from 210,000 at September 30, 1998. @Home
subscriber network revenues from United States subscribers and Canadian
subscribers represented 78% and 22%, respectively, for the three months ended
September 30, 1999. We also had a small number of subscribers through our joint
venture in the Netherlands. However, revenues from these subscribers were not
significant for the three and nine months ended September 30, 1999.

   Subscriber network and other revenues from the @Work service during the
three and nine months ended September 30, 1999 increased from the comparable
periods of the prior year as our @Work subscriber base increased 236% to 4,200
at September 30, 1999 from 1,250 at September 30, 1998.

 Revenues from related parties

   Of the total revenues, revenues from related parties were $8.9 million, or
8% of total revenues, for the three months ended September 30, 1999, compared
to $2.9 million, or 21% of total revenues, for the comparable period of the
prior year. Current year to date revenues from related parties were $21.3
million, or 10% of total revenues, compared to $6.1 million, or 21% of total
revenues, for the comparable period of the prior year.

   We have made strategic investments, some of which we expect to earn revenues
equal to or in excess of our cash investment. Revenues from these companies
were $5.7 million and $13.4 million for the three and nine months ended
September 30, 1999, respectively. Revenues from these companies were $482,000
for the three and nine months ended September 30, 1998.

   Revenues from the exchange of media and advertising services for advertising
in other media were less than 10% of total revenues for the three and nine
months ended September 30, 1999 and 1998. Revenues from these exchanges are
recorded at the fair value of the services provided.

                                       16
<PAGE>

Costs and Expenses

   We accounted for the Excite acquisition as a purchase. The costs and
expenses from Excite have been included in our results of operations commencing
on May 28, 1999. Therefore, we believe that period-to-period comparisons of our
historical costs and expenses, in terms of absolute dollars, percentage of
total revenues and related proportional percentages, may not be meaningful and
should not be relied upon as an indication of our future performance.

<TABLE>
<CAPTION>
                                               Three Months
                                                  Ended       Nine Months Ended
                                              September 30,     September 30,
                                             ---------------- -----------------
                                               1999    1998     1999     1998
                                             -------- ------- -------- --------
                                                       (in thousands)
<S>                                          <C>      <C>     <C>      <C>
Cost and expenses:
  Operating costs........................... $ 45,260 $12,256 $ 92,944 $ 30,969
  Product development and engineering.......   16,834   4,588   34,581   12,052
  Sales and marketing.......................   48,179   4,978   81,129   12,834
  General and administrative................    9,028   3,112   19,554    8,911
                                             -------- ------- -------- --------
    Total costs and expenses before cost and
     amortization of distribution agreements
     and acquisition related costs..........  119,301  24,934  228,208   64,766
  Costs and amortization of distribution
   agreements...............................   43,932  13,628   77,655   46,790
  Amortization of goodwill and other
   intangible assets........................  446,647     --   606,751      --
  Purchased in-process research and
   development..............................      --      --    34,400      --
  Costs of business combination.............      922     --    12,603      --
                                             -------- ------- -------- --------
    Total costs and expenses................ $610,802 $38,562 $959,617 $111,556
                                             ======== ======= ======== ========
</TABLE>

 Operating costs

   Operating costs are primarily related to providing services to customers,
maintaining the @Home broadband network, royalties, license agreements and
revenue sharing arrangements for content and other services. In addition,
operating costs include hosting costs related to the maintenance and technical
support of our Internet portals, including Excite, and are comprised
principally of personnel costs, telecommunications costs and equipment
depreciation. These hosting costs are typically lower than the operating costs
related to the @Home broadband network.

   Operating costs increased to $45.3 million, or 40% of total revenues, for
the three months ended September 30, 1999, from $12.3 million, or 89% of total
revenues, for the comparable period of the prior year. Current year to date
operating costs increased to $92.9 million, or 45% of total revenues, from
$31.0 million, or 108% of total revenues, for the comparable period of the
prior year. The increase in 1999 was partially attributable to the Excite
acquisition, as Excite had a number of network personnel and engineers that
continue to work for us. The increase in operating costs in 1999 were
attributable to activities in the following proportions for the three and nine
months ended September 30, 1999, respectively:

  . approximately 30% and 34% was due to hosting costs for our Internet
    portals, ad serving and target marketing services which increased with
    the acquisition of Excite;

  . approximately 26% and 32% was due to maintenance and depreciation of
    capital equipment and telecommunications costs required for our broadband
    network;

  . approximately 16% and 13% was due to royalties, license agreements and
    revenue sharing arrangements for content and other services for our
    Internet portals, including Excite; and

  . approximately 15% and 14% was due to costs of customer service operations
    to support a larger subscriber base.

   We expect operating costs will continue to increase in absolute dollars
substantially in the future as we continue to make substantial investments in
network infrastructure and customer service operations. In addition,

                                       17
<PAGE>

due to the acquisition of iMALL, the proposed acquisition of Bluemountain.com
and future acquisitions, we anticipate that operating costs will increase due
to additional personnel, equipment depreciation, royalties and revenue sharing
arrangements.

 Gross Margin

   Gross margins increased to $67.3 million, or 60% of total revenues, for the
three months ended September 30, 1999, from $1.6 million, or 11% of total
revenues, for the comparable period of the prior year. Current year to date
gross margins increased to $115.3 million, or 55% of total revenues, from
$(2.2) million, or (8)% of total revenues for the comparable period of the
prior year. The increase in gross margins in absolute dollars and as a
percentage of revenues in 1999 was primarily due to an increase in media and
advertising revenues with historically lower direct costs than subscriber
network services from the prior year.

   In the future, the types of advertisements sold and revenue sharing
provisions of distribution and content agreements may affect gross margin. We
believe the continued expansion of our operations is critical to the
achievement of the Company's goals, and we anticipate that costs and expenses
to increase in the future although at a slower rate than the expected increase
in our revenues. However, our operating results may fluctuate significantly,
and revenues may grow at a slower rate than costs and expenses.

 Product development and engineering

   Product development and engineering expenses consist primarily of salaries
and related expenses for engineering and editorial personnel, consulting fees,
equipment depreciation, supplies and the allocated cost of facilities.

   Product development and engineering expenses increased to $16.8 million, or
15% of total revenues, for the three months ended September 30, 1999, from $4.6
million, or 33% of total revenues, for the comparable period of the prior year.
Current year to date product and development and engineering expenses increased
to $34.6 million, or 17% of total revenues, from $12.1 million, or 42% of total
revenues, for the comparable period of the prior year. The increase in product
development and engineering expenses in 1999, attributable to activities in the
following proportions for the three and nine months ended September 30, 1999,
respectively:

  . approximately 45% and 35% was due to the development and introduction of
    new services on our Internet portals including Excite;

  . approximately 20% and 28% was due to the continued development of the
    @Home backbone to incorporate new telecommunications and server
    technologies and efforts to incorporate Internet technologies into
    advanced digital set-top boxes; and

  . approximately 17% and 16% was due to the development of ad serving and
    targeted marketing technologies for advertisers on the Internet.

   We anticipate that product development and engineering expenses will
continue to increase in absolute dollars in the future due in part to:

  . increased technology development efforts related to our broadband
    network, including continuing design and deployment costs and costs
    related to providing the Excite personalized service or the @Home
    broadband Internet service;

  . development and introduction of new content and services on our Internet
    portals, in order to create and maintain brand loyalty among customers
    and users of our narrowband and broadband Internet services; and

  . additional technology development efforts in the integration of acquired
    technologies from Excite, iMALL and other companies acquired in the
    future.

 Sales and marketing

   Sales and marketing expenses consist primarily of personnel costs,
commissions, promotional and advertising expenses and agency and consulting
fees. For our media and advertising services, we have a direct

                                       18
<PAGE>

sales force to sell banner advertisements and sponsorships on the Excite
Network and the @Home broadband Internet service to advertisers and advertising
agencies. For our subscriber network services, we currently rely on our cable
partners to sell the @Home broadband Internet service. In addition, we have
engaged in nationwide marketing of the service through promotional activities
and retail initiatives. We also incur promotional and advertising expenses as
we promote our brands and introduce new services in order to create and
maintain brand loyalty among customers.

   Sales and marketing expenses increased to $48.2 million, or 43% of total
revenues, for the three months ended September 30, 1999, from $5.0 million, or
36% of total revenues, for the comparable period of the prior year. Current
year-to-date sales and marketing expenses increased to $81.1 million, or 39% of
total revenues, from $12.8 million or 45% of total revenues, for the comparable
period of the prior year. The increase in 1999 was primarily attributable to
the Excite acquisition, as Excite maintains a direct sales force and engages in
a number of marketing activities to promote its brands and customer loyalty.
The increase in sales and marketing expenses in 1999 were attributable to
activities in the following proportions for the three and nine months ended
September 30, 1999, respectively:

  . approximately 40% and 37% was due to promotional and advertising expense;

  . approximately 24% and 19% was due to advertising sales activities for the
    generation of media and advertising revenues;

  . approximately 17% and 16% was due to sponsorship and content arrangements
    for the continued expansion of our Internet portals' market reach and
    number of users; and

  . approximately 4% and 5% was due to @Home subscriber acquisitions.

   We expect sales and marketing expenses will continue to increase in absolute
dollars in the future primarily due to personnel and other costs related to:

  . direct sales force to sell banner advertisements and sponsorships on the
    Excite Network and the @Home broadband service to advertisers and
    advertising agencies;

  . promotional and advertising expenses in an effort to create and maintain
    brand loyalty among customers and expand market reach;

  . sponsorship and content arrangements; and

  . @Home and @Work subscriber acquisition related marketing activities,
    including expanded retail initiatives.

 General and administrative

   General and administrative expenses consist primarily of administrative and
executive personnel costs, fees for professional services and the costs of
computer systems to support our operations.

   General and administrative expenses increased to $9.0 million, or 8% of
total revenues, for the three months ended September 30, 1999, from $3.1
million, or 23% of total revenues, for the comparable period of 1998. Current
year to date general and administrative expenses increased to $19.6 million, or
9% of total revenues, from $8.9 million, or 31% of total revenues, for the
comparable period of the prior year. The increase in 1999 was partially
attributable to the Excite acquisition, as Excite had a number of general and
administrative personnel who continue to work for us. The increase in 1999, was
attributable to the addition of personnel, expenditures related to facilities
and information technology to support the expansion and infrastructure of our
operations.

   We anticipate that general and administrative expenses will continue to
increase in absolute dollars in the future as we expand our administrative and
executive staff, add infrastructure and assimilate acquired businesses.

                                       19
<PAGE>

 Cost and amortization of distribution agreements

   Cost and amortization of distribution agreements consist primarily of
charges and amortization related to warrants to purchase our Series A common
stock issued in connection with distribution agreements with some of our cable
partners, a portion of which vest based on their future performance in
connection with distributing our broadband Internet services. Cost and
amortization of distribution agreements increased in the three months ended
September 30, 1999 to $43.9 million, from $13.6 million for the comparable
period of the prior year. Current year to date cost and amortization of
distribution agreements increased to $77.7 million, from $46.8 million for the
comparable period of the prior year. The increased cost and amortization of
distribution agreements for 1999 was primarily attributable to the amortization
of cable partner distribution agreements and charges associated with the
achievement of performance milestones by some of our cable partners.

   We will incur a minimum of approximately $22.6 million per quarter for
amortization of these distribution agreements through the first half of 2002.
This amount may increase if AT&T transfers cable systems to Cablevision. In
addition, total cost and amortization of distribution agreements may fluctuate
significantly each quarter depending upon whether our cable partners achieve
performance milestones.

 Amortization of goodwill and other intangible assets

   Amortization of goodwill and other intangible assets for the three and nine
months ended September 30, 1999 was $446.6 million and $606.8 million,
respectively. During the three and nine months ended September 30, 1999, we
incurred charges of $439.9 million and $586.6 million, respectively, relating
to the amortization of goodwill and other purchased intangible assets resulting
for the Excite acquisition on May 28, 1999. The remaining charges for the three
and nine months ended September 30, 1999 of $6.7 million and $20.2 million,
respectively, were primarily attributable to the amortization of goodwill and
other purchased intangible assets resulting from the acquisition of Full Force
in November 1998 and Narrative in December 1998.

   We expect to incur quarterly charges to amortization of goodwill and other
intangible assets of approximately $440.0 million related to the acquisition of
Excite through the second quarter of 2003 and approximately $6.7 million per
quarter related to the acquisitions of Full Force and Narrative through the
second quarter of 2002. In addition, we expect to incur additional charges to
amortization of goodwill and other intangible assets related to the acquisition
of iMALL and Bluemountain.com. In the event of future acquisitions, we
anticipate that amortization of goodwill and other intangible assets will
increase.

 Purchased in-process research and development

   In connection with the purchase of Excite, we recorded $34.4 million to in-
process research and development during the second quarter of 1999. The in-
process research and development value was determined by identifying the
research projects for which technological feasibility had not been achieved and
assessing the date of completion of the research and development effort. This
amount represents an allocation of purchase price to six primary projects as
follows:

  Search. Within the search group, there were two significant in-process
  projects, Spider and Directory. The Spider project, otherwise know as Black
  Widow, is a system to retrieve and manage web documents, maintain rich
  information about documents and create vertical indices. Black Widow was a
  complete restructuring of the legacy indexing system and includes Java
  programming and a distributed PC design. The Spider technology was
  completed in August 1999. The Directory project categorizes web site and
  other content and also serves promotional placement within the Excite
  Network content. Management estimates that the Directory project was
  approximately 10% complete at the date of acquisition and approximately 80%
  complete at September 30, 1999. This project is expected to be completed by
  March 2000.

  Content. The most research and development efforts in the content area
  centered on completely rewriting Excite's production system in addition to
  significant development efforts in the feeds platform, page

                                       20
<PAGE>

  generation, notification, desktop and personalization technologies. A
  production system allows for the creation of editorial content for a site
  and the scheduling of content for publication on a live site. Management
  estimates that the production system was approximately 10% complete at the
  date of acquisition and approximately 60% complete at September 30, 1999.
  This project is expected to be completed by March 2000. Management further
  estimates that the feeds platform was approximately 10% complete at the
  date of acquisition and approximately 20% complete at September 30, 1999.
  This project is expected to be completed by September 2000. In addition,
  management estimates that the notification technology was approximately 10%
  complete at the date of acquisition and approximately 50% complete at
  September 30, 1999. This project is expected to be completed by June 2000.
  The personalization, page generation and desktop technologies were
  completed by September 1999.

  Communities. In the community area, significant research and development
  efforts were centered on a platform for writing and aggregating community
  applications, otherwise know as Throw. Management estimates that this
  project was approximately 70% complete at the date of acquisition and
  approximately 90% complete at September 30, 1999. This project is expected
  to be completed by March 2000. Instant messaging also was an area of
  significant design activity. Management estimates that this project was
  approximately 45% complete at the date of acquisition. This technology was
  replaced by licensed technology before it reached technological
  feasibility. The new architecture is expected to have features as well as
  cash flow potential exceeding the original scale. The third area of
  research and development was the Message Board. Management estimates that
  this project was approximately 80% complete at the date of acquisition.
  This project was completed by September 1999.

  Commerce. In the commerce area, a completely new retail product was under
  development. A new architecture was being developed for retail product
  searches. Management estimates that this project was approximately 50%
  complete at the date of acquisition and approximately 80% complete at
  September 30, 1999. This project is expected to be completed by December
  1999.

  PIM. In the PIM area, the significant in-process project is the Organizer.
  This technology will allow Excite users to access a personalized calendar
  from any computer with Internet access. Management estimates that this
  project was approximately 25% complete at the date of acquisition. The
  project was completed in June 1999.

  Digital Marketing. Within the digital marketing group, there were two
  significant in-process projects. The @tlantis technology delivers one-to-
  one video advertising to consumers through cable television. Management
  estimates that @tlantis was approximately 84% complete at the date of
  acquisition. A working prototype was completed by September 1999. Concorde
  is the next generation ad management system for Excite replacing the
  existing ad management system. Management estimates that Concorde was
  approximately 21% complete at the date of acquisition and approximately 85%
  complete at September 30, 1999. This project is expected to be completed by
  March 2000.

 Estimated Costs

   At the date of acquisition, the expected total costs to complete the six
projects were approximately $17.0 million. Based on the progress of the in-
process projects management estimates that approximately $3.0 million will be
required to complete these projects as of September 30, 1999. The nature of the
efforts required developing the acquired in-process technology into
technologically feasible and commercially viable products or services includes
engineering efforts related to planning, designing and testing. Management
expects that the acquired in-process technologies can be successfully
developed, but we cannot assure that commercial viability of these products or
service will be achieved.

   Development of the technology remains a substantial risk due to the
remaining effort to achieve technical feasibility, rapidly changing customer
markets and competition from other companies. Additionally, the value of other
intangible assets acquired may become impaired. Management believes that the
in-process research and development charge of $34.4 million is valued
consistently with the SEC staff's view regarding valuation

                                       21
<PAGE>

methodologies. We cannot, however, assure that the SEC staff will not take
issue with any assumptions used in the valuation model and require us to revise
the amount allocated to in-process research and development.

 Value Assigned to In-Process Research and Development

   Purchased in-process technology represents the present value of the
estimated after-tax cash flows expected to be generated by the purchased
technology, which, at the acquisition date, had not yet reached technological
feasibility and had no alternative future uses. The percentage of completion
for the technology projects were determined using milestones representing
management's estimate of effort, value added and degree of difficulty of the
portion of each project completed at the date of acquisition as compared to the
remaining research and development to be completed to bring the projects to
technical feasibility.

   The cash flow projections for revenues were based on the projected
incremental increase in revenue attributable to the in-process technology that
the Company will receive as a result of the acquisition. Revenues derived from
the in-process technology (excluding digital marketing) were expected to
increase through 2001 and then decrease in 2002. No revenue was assigned to in-
process technology in 2003 or beyond because 2003 is estimated to be the end of
the in-process technology's economic life. Revenues derived from the in-process
technology for digital marketing were expected to increase through 2003 and
then decrease in 2004. No revenue was assigned to in-process technology in 2005
or beyond because 2005 is estimated to be the end of the in-process
technology's economic life. Estimated operating expenses and income taxes were
deducted from estimated revenue projections to arrive at estimated after-tax
cash flows. Projected operating expenses include:

  . cost of revenues;

  . general and administrative expenses;

  . sales and marketing expenses;

  . and research and development, including estimated costs to maintain the
    technology once it has achieved technological feasibility.

   Operating expenses were estimated as a percentage of revenue and were based
primarily on management projections and industry averages. The discount rate
used to discount the net cash flows back to their present values is based on
the weighted average cost of capital, or "WACC". Discount rates of 21% to 40%
were used for valuing the in-process technology. These discount rates are
higher than the implied WACC due to the inherent uncertainties surrounding the
successful development of the purchased in-process technology, the useful life
of such technology, the profitability levels of such technology, and the
uncertainty of technological advances that are unknown at this time. As is
standard in the valuation of high growth markets, projected revenues, expenses
and discount rates reflect the probability of technical and marketing success.

 Costs of business combinations

   Costs directly associated with the merger with Excite, which do not qualify
for inclusion in the purchase consideration, were $922,000 and $12.6 million
during the three and nine months ended September 30, 1999, respectively. Such
costs for the nine months ended September 30, 1999 included $8.1 million in At
Home employee severance and retention costs, $1.1 million of systems
integration costs, $1.3 million of professional fees and $2.1 million in other
related costs. We expect to continue to incur business combination costs
related to the acquisition of iMALL, BlueMountain.com and other companies in
the future.

                                       22
<PAGE>

 Interest and other income, net

<TABLE>
<CAPTION>
                                                                 Nine Months
                                          Three Months Ended        Ended
                                             September 30,      September 30,
                                          --------------------  ---------------
                                            1999       1998      1999     1998
                                          ---------  ---------  -------  ------
                                                    (in thousands)
<S>                                       <C>        <C>        <C>      <C>
Interest and other income................ $   6,682  $   1,985  $30,704  $4,955
Interest and other expense...............    (4,126)      (525) (10,299) (1,482)
                                          ---------  ---------  -------  ------
  Interest and other income, net......... $   2,556  $   1,460  $20,405  $3,473
                                          =========  =========  =======  ======
</TABLE>

   Interest and other income, net increased to $2.6 million for the three
months ended September 30, 1999, from $1.5 million for the comparable period of
the prior year. Current year to date interest and other income, net, increased
to $20.4 million, from $3.5 million for the comparable period of the prior
year. The increase in 1999 was due primarily to an increase in interest income
earned on higher cash and investment balances as a result of the funds received
from our secondary offering in July 1998 and the private offering of
convertible subordinated debentures in December 1998. In addition, this
increase is also attributable to the recognition of a $12.6 million one-time
gain in February on an investment in a privately held company due to the
investee being acquired for common stock by a publicly traded company and gains
from the sale of equity securities in publicly held companies. The increase in
interest and other income was partially offset by interest expense on debt,
capital lease and other financing obligations, including convertible
subordinated debentures.

 Equity in losses of affiliated companies

<TABLE>
<CAPTION>
                                       Three Months Ended   Nine Months Ended
                                          September 30,       September 30,
                                       -------------------- ------------------
                                         1999       1998      1999      1998
                                       ---------  --------- --------  --------
                                                  (in thousands)
<S>                                    <C>        <C>       <C>       <C>
Equity in losses of affiliated
 companies............................ $  (2,876) $     --  $ (3,618) $    --
                                       =========  ========= ========  ========
</TABLE>

   In May 1999, in connection with the acquisition of Excite, approximately
$21.0 million of the purchase price was allocated to investments of Excite's
affiliated companies based on the fair value of these investments at the date
of the acquisition. As of September 30, 1999, our investments in affiliated
companies were $19.3 million. This balance consists of investments in joint
ventures and privately held companies, including a joint venture with Rogers
Media, Inc., a related party, which we account for under the equity method. Our
equity interest in these affiliated companies' ranges from 22% to 50%. The
equity in losses of affiliated companies for the three and nine months ended
September 30, 1999 was $2.9 million and $3.6 million. We expect to record
increased losses from these affiliated companies during the remainder of 1999.

Liquidity and Capital Resources

   Since inception, we have financed our operations primarily through a
combination of private and public sales of equity and convertible debt
securities and capital lease and other financing arrangements. At September 30,
1999, our principal source of liquidity was approximately $449.1 million of
cash, cash equivalents and short-term cash investments, compared with $419.3
million at December 31, 1998.

<TABLE>
<CAPTION>
                                                       Nine Months Ended
                                                         September 30,
                                                   ---------------------------
                                                     1999       1998    Change
                                                   ---------  --------  ------
                                                        (in thousands)
   <S>                                             <C>        <C>       <C>
   Cash and cash equivalents...................... $ 162,184  $105,131    54 %
   Net cash provided by (used in) operating
    activities.................................... $  54,997  $(24,501)  324 %
   Net cash used in investing activities.......... $(211,272) $(34,193)  518 %
   Net cash provided by financing activities...... $  17,757  $119,612   (85)%
</TABLE>

                                       23
<PAGE>

 Operating activities

   Net cash provided by operating activities during the nine months ended
September 30, 1999 was $55.0 million compared to net cash used in operating
activities of $24.5 million for the comparable period of 1998. Net cash
provided by operating activities during 1999 reflects a net loss of $734.6
million compared to $79.3 million for the comparable period of the prior year.
Non-cash charges, which were charged to operations and included in net loss,
but do not require the use of cash, amounted to $754.5 million compared to
$57.1 million in the comparable period of the prior year. This increase in non-
cash charges during 1999 included: amortization of goodwill and other
intangible assets of $586.6 million related to the Excite acquisition in May
1999 and $20.2 million related to the acquisitions of Full Force in November
1998 and Narrative in December 1998; purchased in-process research and
development of $34.4 million related to the Excite acquisition; costs and
amortization of distribution agreements of $77.7 million and various
depreciation and amortization charges of $30.8 million. The increase in cash
from operating activities during 1999, included a one-time cash refund of
approximately $32.9 million in September 1999 from the termination of Excite's
agreement with respect to Netcenter Agreement during the three months ended
June 30, 1999, as a result of the acquisition of Netscape by America Online,
Inc. Net cash from operating activities after non-cash charges in the nine
months ended September 30, 1999 compared to net cash used in operating
activities from the comparable period of the prior year also reflects decreases
in accounts receivable and other assets, partially offset by decreases in
accounts payable, other accrued liabilities and customer deposits.

 Investing activities

   Net cash used in investing activities for the nine months ended September
30, 1999 was $211.3 million compared to $34.2 million for the comparable period
of the prior year. The increased use of cash in investing activities during
1999 was attributable to the net purchases of short and long-term investments
and the purchases of property, equipment and improvements, partially offset by
the cash portion of the purchase consideration for the Excite acquisition in
May 1999 of $34.3 million. Capital expenditures have been, and future
expenditures are anticipated to be, primarily for facilities and equipment to
support expansion of our business and network operations. We expect that our
capital expenditures will increase as our business and employee base grows.

 Financing activities

   Net cash from financing activities for the nine months ended September 30,
1999 was $17.8 million compared to $119.6 million for the comparable period of
the prior year. Financing activities for the nine months ended September 30,
1999 included $39.0 million from the issuance of common stock and stock option
exercises primarily under our equity incentive plans, partially offset by $21.2
million in payments on capital lease and other financing obligations. Financing
activities for the nine months ended September 30, 1998, included $126.0
million from our public stock offering in August 1998, partially offset by $9.0
million in payments on capital lease obligations.

 Commitments

   On October 23, 1999, we entered into an agreement with Hartford House to
acquire Bluemountain.com for 11,000 shares of our non-voting convertible
preferred stock, convertible into approximately 11 million shares of our Series
A common stock, and $350.0 million in cash. We may seek alternative financing,
such as selling additional equity or debt securities to fund the cash
consideration of $350.0 million to the stockholders of Hartford House in
connection with this acquisition.

   In December 1998, we entered into an agreement with AT&T to create a
nationwide network utilizing AT&T's backbone. At September 30, 1999, we had
payments remaining of $34.0 million in 1999 and $45.0 million in 2000.

                                       24
<PAGE>

   In September 1997, we entered into a term loan agreement with Silicon Valley
Bank. The term loan, as amended in October 1998, allows us to borrow up to
$15.0 million to finance the acquisition of property, equipment and
improvements and to collateralize letters of credit. At our option, borrowings
under this term loan bear interest either at the bank's prime rate or at LIBOR
plus 2.5%. As of September 30, 1999, there were no borrowings under this term
loan, although there were outstanding letters of credit in the amount of
$2.4 million related to real property transactions. Under the term loan
agreement, we are required to meet financial covenants. At September 30, 1999
we were in compliance with these covenants. The term loan expires on October
19, 2002.

   Our corporate headquarters consist of facilities of approximately 500,000
square feet in Redwood City, California, which we occupy under 10 to 15 year
leases. Rental payments for these facilities are approximately $1.0 million per
month. In addition, we have new facilities under construction of approximately
185,000 square feet on adjacent property. We have leases on these new
facilities of up to 15 years in length. Rent under these leases is based on
construction costs, and we will pay for some tenant improvements. Occupancy of
these new facilities is scheduled to occur early in the year 2000 and will
result in estimated additional rental payments of approximately $400,000 per
month.

   We will need to obtain financing to cover the cash portion of the purchase
price of Bluemountain.com. We believe that, if we are successful in obtaining
this financing, we otherwise have the financial resources needed to meet our
presently anticipated business requirements, including capital expenditure and
strategic operating programs, for at least the next 12 months. Thereafter, if
cash generated by operations is insufficient to satisfy our liquidity
requirements, we may need to seek alternative financing, such as selling
additional equity or debt securities or obtaining additional credit facilities.
However, depending on market conditions, we may consider alternative financing
even if our financial resources are adequate to meet presently anticipated
business requirements. The sale of additional equity or convertible debt
securities may result in additional dilution to our stockholders. Financing may
not be available on terms acceptable to us or at all.

Year 2000 Implications

   Many currently installed computer systems and hardware and software products
are coded to accept only two digit entries in the date code field and cannot
distinguish 21st century dates from 20th century dates. These date code fields
will need to distinguish 21st century dates from 20th century dates and, as a
result, many companies' software and computer systems may need to be upgraded
or replaced in order to comply with such "Year 2000" requirements. Our business
is dependent on the operation of numerous systems that may potentially be
adversely impacted by Year 2000 related problems. Those systems include, among
others:

  . hardware and software systems used by us to deliver our @Home, @Work and
    narrowband services to our consumers and advertisers, including our
    proprietary software systems as well as hardware and software supplied by
    third parties;

  . communications networks, such as the Internet, which we depend on to
    provide services;

  . the internal systems of our consumers, users and suppliers;

  . the hardware and software systems used internally by us in the management
    of our business; and

  . non-information technology systems and devices used by us in our
    business, such as telephone and building systems.

 State of Readiness

   We and our majority shareholder, AT&T, have implemented a six-phase plan to
mitigate possible Year 2000 affects on our business and systems. We have
designated a Year 2000 project team to develop and implement that plan. This
plan has executive sponsorship and is regularly reviewed by senior management.
This six-phase plan includes the following:

  . Phase one, awareness: involves increasing company awareness by educating
    and involving all appropriate levels of management regarding the need to
    address Year 2000 issues.

                                       25
<PAGE>

  . Phase two, inventory: consists of identifying all of our systems,
    technology, services and relationships that may be impacted by Year 2000.

  . Phase three, assessment: involves determining our current state of Year
    2000 readiness for those areas identified in the inventory phase and
    prioritizing areas that need to be addressed.

  . Phase four, remediation: consists of developing a plan and repairing,
    replacing or retiring those systems identified as needing correction in
    the assessment phase.

  . Phase five, validation: involves developing test plans, conducting tests
    and analyzing the results of these tests to assure all key systems are
    Year 2000 compliant.

  . Phase six, implementation and contingency planning: consists of moving
    compliant systems back into the production environment and to assure
    systems' Year 2000 status remains unaffected by subsequent changes. The
    contingency plan includes developing our response to failure of mission
    critical systems, and other major risks related to Year 2000 compliance.

   We have completed phases one through four (awareness, inventory, assessment
and remediation) and the implementation portion of phase six. Phase five,
validation, is substantially complete. The second half of phase six,
contingency planning, is scheduled to be complete in early December of 1999.

   As part of the normal course of our operations, we are in the process of
transitioning to or implementing new computer software for our billing and
network management systems. We are assessing and testing these systems for Year
2000 dependencies and will implement changes to such systems if necessary. The
successful implementation of these systems is crucial to the efficient
operation of our business. We may not be successful implementing new systems in
an efficient and timely manner and the new systems may not be adequate to
support our operations. Problems with installation or initial operation of the
new systems could cause substantial difficulties in operations planning,
business management and financial reporting, which could have a material
adverse effect on our business. The cost of bringing our new systems into Year
2000 compliance, if necessary, is not expected to have a material effect on our
financial condition or results of operations.

   In addition to the systems used in our business, we utilize third-party
equipment and software in the delivery of our services and in the management of
our business that may not be Year 2000 compliant. We have initiated formal
communications with many of our significant vendors to determine the extent to
which we are vulnerable to these vendors' failure to remedy their own Year 2000
issues. Based on our progress on formal communications with our significant
vendors, we currently believe that our internal systems are, or can readily be
made, Year 2000 compliant in all material respects. We are taking steps with
respect to new vendor agreements to seek assurance that the vendors' products
and internal systems are Year 2000 compliant. Even if we receive these
assurances, we may still experience vendor-related Year 2000 problems. Failure
of third-party equipment or software or of non-information technology systems
and devices used by us to become Year 2000 compliant may require us to incur
unanticipated expenses to remedy problems. This could have a material effect on
our financial condition.

   We also rely, both domestically and internationally, upon various vendors,
governmental agencies, utility companies, telecommunication service companies,
including Internet service and online service providers, delivery service
companies and other service providers who are outside our control. Further, we
have not fully determined the progress of our joint venture partners and
content partners in identifying and addressing systems that may potentially be
impacted by Year 2000 related problems. Failure of these parties to become Year
2000 compliant may have a material effect on our business.

 Contingency Plan

   Although we currently expect that the Year 2000 issue will not pose
significant operational problems, delays in the implementation of new
information systems or a failure to fully identify all Year 2000 dependencies
in our existing systems and in the systems of our suppliers could have material
adverse

                                       26
<PAGE>

consequences. Therefore, we are developing contingency plans to mitigate Year
2000 risks to continuing operations in the event that these problems arise. The
contingency plans will identify critical functions, operational recovery
timelines and strategies to mitigate the effects of Year 2000 on these critical
functions.

 Risks Related to Year 2000 Issues

   Any failure of ours to address Year 2000 issues may have a material adverse
affect on our business. These affects may include, but are not be limited to:

  . a reduction in our ability to provide services for our customers such as
    having specific content or services available;

  . a reduction in our ability to deliver, track and measure Internet
    advertisements and recognize or process sales;

  . our service could experience outages, delays and other difficulties due
    to system failures, which may make our services unavailable for
    consumers; and

  . decreased utilization of our services, which may adversely affect our
    advertising relationships.

   We are also subject to external forces that generally affect similarly
situated business over which we have no control, such as possible interruptions
of utility or Internet-related data network services as a result of Year 2000
failures, any of which may have similar material affects.

   Furthermore, Year 2000 issues may affect the purchasing patterns of
advertisers as companies expend significant resources to correct their current
systems for Year 2000 readiness. These expenditures may result in reduced funds
available for Internet advertising or sponsorship of Internet services, which
may have a material adverse affect on our financial condition.

   The results of our Year 2000 testing and implementation phase activities and
responses received from significant third-party vendors and service providers
will be taken into account in determining the nature and extent of any
contingency plans.

 Costs

   The costs incurred through September 30, 1999 to support our Year 2000
compliance initiative were approximately $355,000. While Year 2000 costs
incurred to date have not been significant, we expect to incur additional
$100,000 in costs and expenditures to remedy any Year 2000 related problems.
There is risk that additional costs may be incurred, but based on our current
knowledge we are unable to fully ascertain those costs.

   The above discussion regarding costs, risks and estimated completion dates
for the Year 2000 is based on our best estimates given information that is
currently available, and is subject to change.

                                       27
<PAGE>

                                 RISK FACTORS

Risks Related to Excite@Home's Business

   We may fail to integrate our business and technologies with the business
   and technologies of Excite, Bluemountain.com and the other companies we
   have recently acquired or may acquire

   We have completed several acquisitions recently, including our recent
acquisitions of Excite, Inc. in May 1999 and iMALL, Inc. in October 1999. We
have also agreed to acquire Bluemountain.com. We intend to pursue additional
acquisitions in the future. If we fail to integrate these businesses, our
quarterly and annual results may be adversely affected. Integrating acquired
organizations and products and services could be expensive, time-consuming and
a strain on our resources. Risks we could face with respect to acquisitions
include:

  .  the difficulty of integrating acquired technology or content into our
     services;

  .  the difficulty of assimilating the personnel of the acquired companies;

  .  the difficulty of coordinating and integrating geographically-dispersed
     operations;

  .  our ability to retain customers of an acquired company;

  .  the potential disruption of our ongoing business and distraction of
     management;

  .  the maintenance of brand recognition of acquired businesses;

  .  the failure to successfully develop acquired in-process technology,
     resulting in the impairment of amounts currently capitalized as
     intangible assets;

  .  unanticipated expenses related to technology integration;

  .  the maintenance of uniform standards, corporate cultures, controls,
     procedures and policies;

  .  the impairment of relationships with employees and customers as a result
     of any integration of new management personnel; and

  .  the potential unknown liabilities associated with acquired businesses.

   Our inability to address any of these risks successfully could harm our
business.

   In particular, a current challenge is to integrate the technology platform
of the @Home network broadband services with Excite's Internet services and
the advertising services of Excite's subsidiary, MatchLogic. Currently, the
Excite narrowband services are operated from Excite's network operations
centers. Integration of the Excite and MatchLogic services to the @Home
network broadband platform poses a number of technical challenges, including
difficulties associated with providing regularly updated and personalized
content over Excite@Home's broadband services and the difficulties associated
with applying the advertising services and targeting technologies from
Excite's MatchLogic subsidiary with the Excite@Home broadband services. This
is particularly challenging because it is more difficult to provide regularly
updated and personalized information from distributed regional data centers,
which we rely upon to deliver our broadband services, than it is to deliver
services from a central data center, as Excite and MatchLogic currently do, in
delivering their narrowband services.

   With respect to any future acquisitions, we may be unable to identify
future acquisition targets and we may be unable to complete future
acquisitions on reasonable terms. Even if we complete an acquisition, we may
have difficulty in integrating it with our current organization, technology
and product and services offerings, and any acquired features, functions,
products or services may not achieve market acceptance.

   Recently-acquired businesses may not be successful

   We have recently acquired two companies in the early stage of development
and with unproven business models.

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<PAGE>

   iMALL. Prior to August 1998, substantially all of iMALL's revenues were
attributable to its seminar business. This business was discontinued in August
1998. iMALL has yet to achieve any significant revenue from its current
business of providing turnkey electronic commerce services to online merchants
or its other shopping-oriented web sites. A market for iMALL's services may not
develop, and iMALL's services may not become widely accepted.

   Bluemountain.com. The proposed acquisition of Bluemountain.com also involves
a number of risks. For example, the Bluemountain.com electronic greeting card
service currently does not sell advertising on its web sites. Bluemountain.com
users may not accept a service that displays advertising. Bluemountain.com
users may not continue to use the Bluemountain.com service for other reasons.
For instance, competitive electronic greeting card sites have increased in
popularity. Also, the popularity of electronic greeting card services could
decline generally. Additionally, advertisers may not choose to advertise on the
Bluemountain.com service if users do not accept advertising or purchase goods
or services on Bluemountain.com in sufficient quantities.

   We have incurred and expect to continue to incur substantial losses

   At Home Corporation was incorporated in March 1995, commenced operations in
August 1995, and has incurred net losses in each fiscal period since its
inception. As of September 30, 1999, we had an accumulated deficit of $961.8
million. Excite, Inc., which we acquired in May 1999, had never been profitable
and Bluemountain.com, which we agreed to acquire in October 1999, has never
realized any significant revenues. In addition, we currently intend to increase
capital expenditures and operating expenses in order to expand our network and
to market and provide our broadband services to potential subscribers as well
as to market our narrowband services. As a result of the acquisitions of Excite
and iMALL and the proposed acquisition of Bluemountain.com, we anticipate that
we will incur substantial non-cash charges relating to the amortization of
goodwill and other intangible assets in future periods. Therefore, we
anticipate that we will incur net losses for the foreseeable future.

   Our quarterly operating results may fluctuate because of a number of factors

   Our quarterly operating results may fluctuate significantly in the future as
a result of a variety of factors, many of which are outside of our control.
These factors include:

  .  the level of usage of the Internet in general and portal web sites in
     particular;

  .  subscriber growth rates and prices charged by our cable partners;

  .  demand for Internet advertising;

  .  the addition or loss of advertisers;

  .  the level of user traffic on our web sites used for our narrowband
     services;

  .  the mix of types of advertising we sell, such as the mix of targeted
     advertising as compared to general rotation advertising;

  .  the amount and timing of capital expenditures and other costs relating
     to the expansion of our operations;

  .  the introduction of new products or services by us or our competitors;

  .  pricing changes for Internet-based advertising;

  .  the timing of marketing expenditures to promote our brands;

  .  costs incurred with respect to acquisitions; and

  .  general economic conditions.

   Our expense levels are based in part on expectations of future revenue and,
to a large extent, are fixed. We may be unable to adjust spending quickly
enough to compensate for any unexpected revenue shortfall.


                                       29
<PAGE>

   Our Internet advertising revenue is subject to seasonal fluctuations.
Historically, advertisers spend less in the first and third calendar quarters,
and user traffic for our narrowband services has historically been lower during
the summer and during year-end vacation and holiday periods.

   Due to all of the foregoing factors and the other risks described in this
section, you should not rely on quarter-to-quarter comparisons of our results
of operations as an indication of future performance, particularly in light of
the number of acquisitions we have completed. It is possible that in some
future periods our results of operations may be below the expectations of
public market analysts and investors. In this event, the price of the notes or
our Series A common stock may fall.

  If we do not develop new and enhanced features, products and services for
  our narrowband and broadband services, we may not be able to attract and
  retain a sufficient number of users

   Because of the competitiveness of our market, we believe it is important to
introduce additional or enhanced features, products and services in the future
in order to differentiate our services and retain our current users and attract
new users. If we introduce a feature, product or service that is not favorably
received by our current users, they may not continue using our services as
frequently and they may choose a competing service.

   We must also continually enhance our products and services to incorporate
rapidly changing Internet technologies. We could incur substantial development
costs if we need to modify our products, services or infrastructure to adapt to
changes in Internet technologies. Our business could be harmed if we incur
significant costs to adapt to these changes. If we cannot adapt to these
changes, users may discontinue using our services.

   We may also experience difficulties that could delay or prevent us from
introducing new features, products or services. Furthermore, these features,
products or services may contain errors that are discovered after the feature,
product or services are introduced. We may need to modify the design of them
significantly to correct these errors. In addition, we must consult with and
involve our principal cable partners in the development and design of new
features, products or services for our broadband services. Therefore, the
process of introducing new broadband features, products and services is time
consuming and if our principal cable partners object to a new feature, product
or service, we could be prohibited from offering it in particular areas. Our
business could be adversely affected if we experience difficulties in
introducing new products and services or if users do not accept these new
products or services.

  We depend on the sale of advertisements on our services, and if online
  advertising does not become accepted, our business would be harmed

   We expect to derive a substantial amount of our revenues from the sale of
advertising on our services for the foreseeable future. No standards have been
widely accepted to measure the effectiveness of online advertising. If
standards do not develop, existing advertisers may not continue their current
levels of online advertising. Furthermore, advertisers that have traditionally
relied upon other advertising media may be reluctant to advertise online.
Advertisers that already have invested substantial resources in other
advertising methods may be reluctant to adopt a new strategy. Our business
would be harmed if the market for online advertising fails to develop or
develops more slowly than expected.

   Different pricing models are used to sell online advertising. It is
difficult to predict which, if any, will emerge as the industry standard. This
makes it difficult to project future advertising rates and revenues. For
example, advertising rates based on the number of "click throughs," or user
requests for additional information made by clicking on the advertisement,
instead of rates based solely on the number of impressions, or times an
advertisement is displayed, could adversely affect our revenues because
impression-based advertising comprises a substantial majority of our current
advertising revenues. Our advertising revenues could be harmed if we are unable
to adapt to new forms of online advertising. Moreover, "filter" software
programs that limit or prevent advertising from being delivered to a web user's
computer are available. Widespread adoption of this software could harm the
commercial viability of online advertising.

                                       30
<PAGE>

   We must develop and maintain the awareness of our brands to attract
consumers and advertisers

   Maintaining and strengthening our brands is critical to achieving
widespread acceptance of our services by consumers and advertisers,
particularly in light of the competitive nature of our markets. Promoting and
positioning our brands will depend largely on the success of our marketing
efforts and our ability to provide high quality services. In order to promote
our brands, we plan to increase our marketing expenses from prior periods. We
may find it necessary to increase our marketing budget or otherwise increase
our financial commitment to creating and maintaining brand loyalty among
users. If we fail to promote and maintain our brands or incur excessive
expenses in an attempt to promote and maintain our brands, our business could
be harmed.

   We could face liability related to the privacy of personal information
about our users

   Our narrowband services use "cookies" to deliver targeted advertising, help
compile demographic information about users and limit the frequency with which
an advertisement is shown to the user. Cookies are bits of information keyed
to a specific drive and passed to a web site server through the user's browser
software. Cookies are placed on the user's hard drive, often without the
user's knowledge or consent. We could face liability relating to the
collection and use of this information, as well as other misuses such as
unauthorized marketing purposes. The Federal Trade Commission and some states
have been investigating Internet companies regarding their use of personal
information. In addition, the United States federal and various state
governments have proposed new laws restricting the collection and use of
information regarding Internet users. We could incur additional expenses if
new regulations regarding the use of personal information are introduced or if
they choose to investigate our privacy practices.

   Privacy concerns could make it more difficult for us to deliver targeted
advertising

   Due to privacy concerns, some Internet commentators, consumer advocates and
governmental officials have suggested that the use of cookies be limited or
eliminated. In addition, certain currently available web browsers allow a user
to delete cookies or prevent cookies from being stored on the user's hard
drive. Any reduction or limitation in the use of cookies could limit the
effectiveness of our ad targeting, which could harm our business.

   The sponsorship advertising we sell subjects us to financial and other
risks

   We derive a substantial portion of our revenues from sponsorship
arrangements. These are advertising relationships under which third parties
receive sponsored services and placements on our services in addition to
traditional banner advertisements across our services. These arrangements
expose us to potential financial risks, including the risk that we fail to
deliver required minimum levels of user impressions and that third-party
sponsors do not renew the agreements at the end of their term. These
arrangements also require us to integrate sponsors' content with our services,
which can require the dedication of resources and programming and design
efforts to accomplish. We may not be able to attract additional sponsors or
renew existing sponsorship arrangements when they expire.

   In addition, we have granted exclusivity provisions to some of our
sponsors, and may in the future grant additional exclusivity provisions. These
exclusivity provisions may have the effect of preventing us from accepting
advertising or sponsorship arrangements from certain advertisers during the
term of the agreements. Our inability to enter into further sponsorship or
advertising arrangements as a result of any exclusivity arrangements could
harm our business.

   We may face potential liability from our electronic commerce-related
advertising arrangements

   Some of our advertising relationships provide that we may receive payments
based on the amount of goods or services purchased by consumers clicking from
our services to a seller's web site. These arrangements may expose us to legal
risks and uncertainties, including potential liabilities to consumers of these
products and services. Although we carry general liability insurance, our
insurance may not cover potential claims of this type or may not be adequate
to indemnify us for all liability that may be imposed.

                                      31
<PAGE>

   Some of the liabilities that may result from these arrangements include:

  .  potential liabilities for illegal activities that may be conducted by
     the sellers;

  .  product liability or other tort claims relating to goods or services
     sold through third-party e-commerce sites;

  .  claims for consumer fraud and false or deceptive advertising or sales
     practices;

  .  breach of contract claims relating to purchases; and

  .  claims that items sold through these sites infringe third-party
     intellectual property rights.

   Even to the extent that these claims do not result in material liability,
investigating and defending these claims could harm our business.

   Our equity investments in other companies may not yield any returns

   We have made equity investments in many Internet companies, including joint
ventures in other countries. In most instances, these investments are in the
form of illiquid securities of private companies. These companies typically
are in an early stage of development and may be expected to incur substantial
losses. Our investments in these companies may not yield any return.
Furthermore, if these companies are not successful, we could incur charges
related to write-downs or write-offs of assets. We also record and continue to
record a share of the net losses in these companies, up to our cost basis, if
they are our affiliates. We and our strategic investors, intend to continue to
make significant additional investments in the future. Losses or charges
resulting from these investments could harm our operating results.

   We must maintain the security of our networks

   We have in the past experienced security breaches in our networks. While we
have taken steps to prevent these breaches, and to prevent users from sharing
files via the @Home service and to protect against bulk unsolicited e-mail,
public concerns about security, privacy and reliability of our networks, or
actual problems with the security, privacy or reliability of our broadband
network, may inhibit the acceptance of our services.

   The need to securely transmit confidential information over the Internet
has been a significant barrier to electronic commerce and communications over
the Internet. Any well-publicized compromise of security could deter more
people from using the Internet or our services or from using them to conduct
transactions that involve transmitting confidential information, such as
purchases of goods or services. Because many of our advertisers seek to
encourage people to use the Internet to purchase goods or services, our
business could be harmed if this were to occur. We may also incur significant
costs to protect against the threat of security breaches or to alleviate
problems caused by these breaches.

  Our limited experience with international operations may prevent us from
  growing our business outside the United States

   A key component of our strategy is to expand into international markets and
offer broadband and narrowband services in those markets. We have limited
experience in developing localized versions of our products and services and
in developing relationships with international cable system operators. We may
not be successful in expanding our product and service offerings into foreign
markets. In addition to the uncertainty regarding our ability to generate
revenues from foreign operations and expand our international presence, we
face specific risks related to providing broadband and narrowband services in
foreign jurisdictions, including:

  .  regulatory requirements, including the regulation of Internet access;

  .  legal uncertainty regarding liability for information retrieved and
     replicated in foreign jurisdictions;

  .  potential inability to use European customer information due to new
     European governmental regulations; and

  .  lack of a developed cable infrastructure in many international markets.

                                      32
<PAGE>

   We may be liable for our links to third-party web sites

   We could be exposed to liability with respect to the third-party web sites
that may be accessible through our services. These claims may allege, among
other things, that by linking to web sites operated by third parties, we may be
liable for copyright or trademark infringement or other unauthorized actions by
third parties through these web sites. Other claims may be based on errors or
false or misleading information provided by our services. Our business could be
harmed due to the cost of investigating and defending these claims, even to the
extent these types of claims do not result in liability.

   Protection of our intellectual property rights is costly and difficult

   We regard our intellectual property, including our patents, copyrights,
trademarks, trade secrets, and similar intellectual property as critical to our
success. We rely upon patents, trademark and copyright law, trade secret
protection and confidentiality or license agreements to protect our proprietary
rights. Effective protection of intellectual property may not be available in
every country in which our products and services are available. We cannot
guarantee that the steps we have taken to protect our proprietary rights will
be adequate.

  We may be subject to intellectual property infringement claims, which are
  costly to defend and could limit our ability to use certain technologies in
  the future

   Many parties are actively developing Internet-related technologies. We
believe that these parties will continue to take steps to protect these
technologies, including seeking patent protection. As a result, we believe that
disputes regarding the ownership of these technologies are likely to arise in
the future. From time to time, parties assert patent infringement claims
against us in the form of letters, lawsuits and other forms of communications.

   In addition to patent claims, third parties may assert claims against us
alleging infringement of copyrights, trademark rights, trade secret rights or
other proprietary rights or alleging unfair competition. For example, we have
two lawsuits pending against us regarding the presentment of advertisements in
response to search requests on "keywords" that are alleged to be trademarks of
third parties. These lawsuits could harm our business. We may incur substantial
expenses in defending against third-party infringement claims regardless of the
merit of the claims. In the event that there is a determination that we have
infringed third-party proprietary rights, we could incur substantial monetary
liability and be prevented from using the rights in the future.

   Our business depends on the continued growth in Internet use

   We operate in a new and rapidly evolving market. Our business may be
adversely affected if usage of the Internet or other online services does not
continue to grow. This growth could be hindered by a number of factors
including: the adequacy of the Internet's infrastructure to meet increased
usage demands; privacy and security concerns; and availability of cost-
effective services. Any of these issues could cause the Internet's performance
or level of usage to decline.

   Future acquisitions could result in dilutive issuances of stock and the need
for additional financing

   We have typically paid for our acquisitions by issuing shares of our capital
stock. In the future, we may effect other large or small acquisitions by using
stock, and this will dilute our stockholders. We may also use cash to buy
companies or technologies in the future, as we propose to do for a portion of
the purchase price for Bluemountain.com, and we may need to incur additional
debt to pay for these acquisitions. Acquisition financing may not be available
on favorable terms or at all. In addition, we will likely be required to
amortize significant amounts of goodwill and other intangible assets in
connection with future acquisitions, which would materially harm our results of
operations.

                                       33
<PAGE>

   We must manage our growth

   Our growth and recent acquisitions have placed a significant strain on our
managerial, operational, and financial resources. For example, we have grown
from 246 employees at March 31, 1997 to over 2,000 employees at September 30,
1999. In addition, we plan to continue to hire additional personnel. To manage
our growth, we must continue to implement and improve our operational and
financial systems and to expand, train and manage our employee base. Any
inability to manage growth effectively could harm our business.

  Government regulation and legal uncertainties relating to the Internet
  could hinder the popularity of the Internet

   New Internet privacy and other laws. There are currently few laws or
regulations that specifically regulate communications or commerce on the
Internet. However, laws and regulations may be adopted in the future that
address issues such as user privacy, pricing, content and the characteristics
and quality of products and services sold over the Internet. For example:

  .  The United States federal and various state governments have proposed
     limitations on the collection and use of information regarding Internet
     users. In October 1998, the European Union adopted a directive that may
     result in limitations on our collection and use of information regarding
     Internet users in Europe.

  .  Several telecommunications companies have petitioned the Federal
     Communications Commission to regulate Internet service providers and
     online service providers in a manner similar to long distance telephone
     carriers and to impose access fees on these companies. This could
     increase the cost of transmitting data over the Internet.

  .  A portion of the Telecommunications Act, which has since been ruled
     unconstitutional, sought to prohibit transmitting certain types of
     information and content over the Internet.

Moreover, it may take years to determine the extent to which existing laws
relating to issues such as property ownership, libel and personal privacy are
applicable to the Internet. Any new laws or regulations relating to the
Internet could harm our business.

   Tax laws. The tax treatment of the Internet and electronic commerce is
currently unsettled. A number of proposals have been made at the federal, state
and local level and by certain foreign governments that could impose taxes on
the sale of goods and services and certain other Internet activities. Our
business may be harmed by the passage of laws in the future imposing taxes or
other burdensome regulations on online commerce.

   We may have to qualify to do business in other jurisdictions. Because
Excite@Home's services will be available in multiple states and foreign
countries such jurisdictions may claim that it is required to qualify to do
business as a foreign corporation in each of these states and foreign
countries. If we fail to qualify as a foreign corporation in a jurisdiction
where we are required to do so, we could be subject to taxes and penalties.

   We could face liability for defamatory or indecent content provided on our
services

   Claims could be made against Internet and online service providers under
both United States and foreign law for defamation, negligence, copyright or
trademark infringement, or other theories based on the nature and content of
the materials disseminated through their networks. Several private lawsuits
seeking to impose this liability are currently pending against Internet and
online services providers. Our insurance may not adequately protect us from
these types of claims.

   In addition, legislation has been proposed that imposes liability for or
prohibits the transmission over the Internet of indecent content. The
imposition upon Internet and online service providers of potential liability
for information carried on or disseminated through their systems could require
us to implement measures to reduce

                                       34
<PAGE>

our exposure to this liability. This may require that we expend substantial
resources or discontinue service or product offerings. The increased focus on
liability issues as a result of these lawsuits and legislative proposals could
impact the growth of Internet use. Furthermore, some foreign governments, such
as Germany's, have enacted laws and regulations governing content distributed
over the Internet that are more strict than those currently in place in the
United States. One or more of these factors could significantly harm our
business.

   Year 2000 issues could affect the performance of our systems

   If our internal and network information systems do not correctly recognize
and process date information beyond the year 1999, we may not be able to
conduct operations. We may also experience supplier-related Year 2000 problems.
To address these Year 2000 issues, we have initiated a comprehensive program to
address Year 2000 readiness in our systems and our suppliers' systems. Despite
our investigation and assurances we have received from third party suppliers,
we may still face unforeseen liabilities with respect to the Year 2000 issue.
Furthermore, delays in the implementation of new information systems or a
failure to fully identify all Year 2000 dependencies in our existing systems
and in the systems of our suppliers could harm our business. Therefore, we are
developing, but do not yet have, contingency plans for continuing operations in
the event these problems arise.

   Our future success depends on our ability to attract, retain and motivate
highly skilled employees

   Our future success depends on our ability to attract, retain and motivate
highly skilled employees. Competition for employees in the Internet industry is
intense, particularly in the Silicon Valley where we are headquartered.
Additionally, it is often more difficult to attract employees once a company's
stock is publicly traded because the exercise price of equity awards such as
stock options are based on the public market, which is highly volatile. We may
be unable to attract, assimilate or retain other highly qualified employees in
the future. We have from time to time in the past experienced, and we expect to
continue to experience in the future, difficulty in hiring and retaining highly
skilled employees with appropriate qualifications. This risk is compounded by
the fact that the Company is controlled by our principal cable partners and
therefore, the Company may not have the same flexibility as a typical Silicon
Valley company to pursue initiatives proposed by management. Moreover, hiring
and retention is made more difficult due to the uncertainty concerning the
relationship we will have with our principal cable partners following the
expiration of their exclusivity obligations in June 2002.

Risks Relating to Excite@Home's Broadband Services

   Our broadband business is unproven, and it may not achieve profitability

   The profit potential of our broadband business model is unproven and our
broadband services may not achieve widespread consumer or commercial
acceptance. We have had difficulty predicting whether the pricing models for
our broadband services will prove to be viable, whether demand for our
broadband services will materialize at the prices our cable partners charge for
our broadband services, or whether current or future pricing levels will be
sustainable. If these pricing levels are not achieved or sustained or if our
broadband services do not achieve or sustain broad market acceptance, our
business will be significantly harmed.

   Growth of our broadband service may be inhibited by factors beyond our
control

   Our ability to increase the number of subscribers to our broadband service
to achieve our business plans and generate future revenues will depend on many
factors which are beyond our control. For instance, some of our cable partners
have not achieved the subscriber levels that we had originally anticipated.
Other factors include:

  .  the rate at which our current and future cable partners upgrade their
     cable infrastructures for two-way data services;

  .  our ability and the ability of our cable partners to coordinate timely
     and effective marketing campaigns with the availability of cable
     infrastructure upgrades;

  .  the success of our cable partners in marketing and installing the @Home
     service in their local cable areas;

  .  the prices that our cable partners set for the @Home service and for its
     installation;


                                       35
<PAGE>

  .  the speed at which our cable partners can complete the installations
     required to initiate service for new subscribers;

  .  the commercial availability of self-installable, two-way modems that
     comply with the recently adopted interface standards known as DOCSIS,
     and the success of the roll-out of these products with the @Home
     service; and

  .  the quality of customer and technical support our cable partners
     provide.

  We need to add subscribers at a rapid rate for our broadband business to
  succeed, but we may not achieve our subscriber growth goals

   Our actual revenues or the rate at which we add new subscribers may differ
from our forecasts. We may not be able to increase our subscriber base enough
to meet our internal forecasts or the forecasts of industry analysts or to a
level that meets the expectations of investors. The rate at which subscribers
have increased in the past does not necessarily indicate the rate at which
subscribers may be expected to grow in the future. In particular, while we have
forecasted that the number of its subscribers could grow to up to 1.1 million
by December 31, 1999, we may not achieve this level of subscriber growth.

   Our broadband subscriber growth is limited by installation and price
constraints

   Installation of the @Home service requires a customer service representative
of a cable partner to install a cable modem at a customer's location and
therefore can be time consuming. If we are unable to speed the installation of
the service, our subscriber growth could be constrained. Moreover, the @Home
service is currently priced at a premium to many other online services, and
large numbers of subscribers may not be willing to pay a premium for the
service. Recently, companies have begun to offer free Internet access with the
purchase of personal computers and some Internet service providers have reduced
or eliminated Internet access charges in exchange for placing advertisements on
a customer's computer screen. If these promotions become more widely used, or
if Internet access fees decline, consumers may be less willing to pay a premium
for broadband services, or our broadband services in particular.

  If we cannot maintain the scalability and speed of our @Home broadband
  network, customers will not accept our broadband services

   Due to the limited deployment of our broadband services, the ability of our
broadband network to connect and manage a substantial number of subscribers at
high transmission speeds is unknown. Therefore, we face risks related to our
network's ability to be scaled up to accommodate increased subscriber levels
while maintaining performance. Our network may be unable to achieve or maintain
a high speed of data transmission, especially as the number of our subscribers
increases. Because of our reliance on regional data centers and the cable
infrastructure in particular geographic locations to support our broadband
services, our and our cable partners' infrastructure must also be able to
accommodate increased subscribers in a particular area. If the existing
infrastructure for a geographic area does not accommodate additional
subscribers, network performance for an area could decline especially if a
cable partner was unwilling to upgrade its infrastructure and we could lose
subscribers in that area.

   In recent periods, the performance of the @Home network has experienced some
deterioration in some markets partially as a result of subscriber abuse of the
@Home service. While we are seeking to eliminate this abuse by enforcing our
acceptable-use policy and by limiting users' upstream bandwidth, our failure to
do so may result in slower network performance and reduced customer demand for
our services.

  If new DOCSIS-compliant cable modems are not deployed timely and
  successfully, our subscriber growth could be constrained

   Each of our subscribers currently must obtain a cable modem from a cable
partner to access the @Home service. The North American cable industry has
recently adopted interface standards known as DOCSIS for

                                       36
<PAGE>

hardware and software to support the delivery of data services over the cable
infrastructure utilizing compatible cable modems. Some of our cable partners
have chosen to delay some deployments of the @Home service until the commercial
availability of DOCSIS-compliant cable modems is widespread, among other
reasons. Subscriber growth could be constrained and our business could be
significantly harmed if our cable partners choose to slow the deployment of the
@Home service further. If our cable partners are not able to obtain a
sufficient quantity of DOCSIS-compliant modems, our growth will be limited.

   We also believe that in order to meet our subscriber goals, two-way cable
modems must also become widely available in other channels, such as through
personal computer manufacturers and through retail outlets. Currently, this
widespread availability has not yet occurred. In addition, these modems must be
easy for consumers to install themselves, rather than requiring a customer
service representative to perform the installation. If two-way cable modems do
not become quickly available in outlets other than through cable television
companies, or if they cannot be installed easily by consumers, it would be
difficult for us to attract large numbers of additional subscribers and our
business would be harmed.

  Our broadband business may be impacted by cable unbundling proposals and
  other government regulation

   Currently, our broadband services are not directly subject to regulations of
the Federal Communication Commission or any other federal, state or local
communications regulatory agency. However, changes in the regulatory
environment relating to the Internet, cable television or telecommunications
markets which could require regulatory compliance by us or which could impact
our exclusivity arrangements, ability to provide broadband services subscribers
and revenues include:

  .  The FCC or local agencies could require our cable partners to grant
     competitors access to their cable systems. America Online, GTE,
     MindSpring Enterprises, Inc., Consumers Union and other parties have
     requested Congress, the Federal Communications Commission and state and
     local authorities to require cable operators to provide Internet and
     online service providers with unbundled access to their cable systems.
     If we or our cable partners are classified as common carriers, or if
     government authorities require third-party access to cable networks or
     unaffiliated Internet service providers, our competitors may be able to
     provide service over our cable partners' systems. The rates that our
     cable partners charge for this third-party access, or for the @Home
     services, could also be subject to rate regulation or tariffing
     requirements.

  .  Local governmental proceedings. Some local jurisdictions, including
     Portland and Multnomah County, Oregon and Broward County, Florida, have
     imposed third-party access requirements on AT&T and other cable
     companies operating in those communities. The imposition of these
     requirements has been challenged in Federal Courts. In June 1999, a U.S.
     District Court upheld the third-party access requirement imposed on AT&T
     by Portland and Multnomah County. This decision has been appealed to the
     U.S. Court of Appeals for the Ninth Circuit. Numerous other local
     jurisdictions have considered or are considering imposing similar third
     party access requirements.

  .  Other litigation. In October 1999, GTE filed a lawsuit in a U.S.
     District Court alleging violations of the federal antitrust laws.
     Although it is too early to predict the outcome of this litigation, we
     could be forced to pay damages, allow other service providers to utilize
     our network or incur significant costs in defending this litigation. Any
     of these outcomes could harm our business. In addition, others could
     initiate litigation on similar legal theories in the future.

  .  Federal regulation. Regulatory changes that affect telecommunications
     costs, limit usage of subscriber-related information or increase
     competition from telecommunications companies could affect our pricing
     or ability to market our broadband services successfully. For example,
     reregulation of cable television rates may affect the speed at which our
     cable partners upgrade their cable systems to carry our broadband
     services.

  .  Regulation by local franchise authorities. Many of our United States
     cable partners' local cable affiliates have elected to classify the
     provision of the @Home service as an additional cable service

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     under their local franchise agreements, and to pay franchise fees under
     those agreements. Local franchise authorities may attempt to subject
     cable systems to higher or different franchise fees, taxes or
     requirements in connection with their distribution of the @Home service.
     There are thousands of franchise authorities, and thus it would be
     difficult or impossible for us or our cable partners to operate without
     a uniform set of franchise requirements.

  We could lose subscribers to, distribution relationships for and revenues
  from our broadband services to our competitors

   The markets for consumer and business broadband services are extremely
competitive, and we expect that competition will intensify in the future. Our
most direct competitors for broadband services include the following:

  .  Providers of cable-based Internet services. Time Warner Inc. and Media
     One Group, which AT&T has agreed to acquire, have deployed high-speed
     Internet access services over their local cable networks through their
     own cable-based Internet service, Road Runner. We currently compete with
     Road Runner to establish distribution arrangements with cable system
     operators and we may compete for subscribers in the future if and when
     our cable partners cease to be subject to their exclusivity obligations.
     In addition, we compete with other providers of cable-based Internet
     services, such as ISP Channel, Inc. and High Speed Access Corporation.

  .  Telecommunications providers. We compete with national long-distance and
     local exchange carriers that offer high-speed, Internet access services
     such as asymmetric digital subscriber line, known as DSL. Recently,
     these services have been offered in a number of areas and at lower
     prices than in the past. If the advanced services offered by these
     companies are deregulated, this would further enhance the ability of
     these companies to compete against our services.

  .  Internet and online service providers. We compete with Internet service
     providers that provide basic Internet access services and with online
     service providers such as America Online and other Internet portals and
     online services that have announced broadband strategies, such as
     Yahoo!.

   Many of our competitors and potential competitors have substantially greater
financial, technical and marketing resources, larger subscriber bases, longer
operating histories, greater name recognition and more established
relationships with advertisers and content and application providers than we
do. These competitors may be able to undertake more extensive marketing
campaigns, adopt more aggressive pricing policies and devote more resources to
developing Internet services or online content than us. We may not be able to
compete successfully against current or future competitors, and competitive
pressures could significantly harm our broadband subscriber base, our ability
to renew and enter into new distribution agreements and our revenues.

  Our dependence on our network to provide our broadband services exposes us
  to a significant risk of system failure

   Our operations for our broadband services are dependent upon our ability to
support our highly complex network infrastructure and avoid damage from fires,
earthquakes, floods, power losses, telecommunications failures and similar
events. The occurrence of a natural disaster or other unanticipated problem at
our network operations center or at a number of our regional data centers could
cause interruptions in our broadband services. Additionally, failure of our
cable partners or companies from which we obtain data transport services to
provide the data communications capacity that we require, for example as a
result of natural disaster, or operational disruption, could cause
interruptions in the services our broadband services. Any damage or failure
that causes interruptions in our network operations could harm our business.

Risks Related to Our Relationships With Our Cable Partners

   The success of our business depends on our relationships with our cable
partners, most of which have agreed to provide our broadband services on an
exclusive basis. We have also agreed not to provide a variety

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<PAGE>

of Internet services in the areas covered by our cable partners. Our agreements
with our cable partners are complex. Some of the risks associated with these
relationships are set forth below. For a summary of some of the key aspects of
these agreements, you should refer to our annual report on Form 10-K/A for the
year ended December 31, 1998.

  We depend on our cable partners to upgrade to the two-way cable
  infrastructure necessary to support the @Home service; the availability and
  timing of these upgrades are uncertain

   Transmission of our broadband services depends on the availability of high-
speed two-way hybrid fiber coaxial cable infrastructure. However, only a
portion of existing cable plant in the United States and in some international
markets has been upgraded to two-way hybrid fiber coaxial cable, and even less
is capable of high-speed two-way transmission. As of September 30, 1999,
approximately 30% of our North American cable partners' cable infrastructure
was capable of delivering the @Home service. Our cable partners have announced
and are implementing major infrastructure investments in order to deploy two-
way hybrid fiber coaxial cable. However, these investments have placed a
significant strain on the financial, managerial, operating and other resources
of our cable partners, most of which are already highly leveraged. Therefore,
these infrastructure investments have been, and we expect will continue to be,
subject to change, delay or cancellation. Furthermore, because of consolidation
in the cable television industry, as well as the sale or transfer of cable
assets among cable television operators, many cable companies have delayed
upgrading particular systems that they plan to sell or transfer. If these
upgrades are not completed in a timely manner, our broadband services may not
be available on a widespread basis and we may not be able to increase our
subscriber base at the rate we anticipate. Although our commercial success
depends on the successful and timely completion of these infrastructure
upgrades, most of our cable partners are under no obligation to upgrade systems
or to introduce, market or promote our broadband services. As has happened in
the past, even if a cable partner upgrades its cable infrastructure, the
upgraded infrastructure may not function properly, and therefore cause a delay
in the availability of our broadband services for particular areas. The failure
of our cable partners to complete these upgrades in a timely and satisfactory
manner, or at all, would prevent us from delivering broadband services and
would significantly harm our business.

  Our cable partners are not generally obligated to carry our broadband
  services, and the exclusivity obligations that prevent them from carrying
  competing services may be terminated

   Most of our cable partners are subject to exclusivity obligations that
prohibit them from obtaining high-speed, greater than 128 kilobits per second,
residential consumer Internet services from any source other than us. However,
most of our cable partners are under no affirmative obligation to carry any of
our broadband services. Also, the exclusivity obligations of our principal
cable partners, AT&T, Comcast Corporation, Cox Communications, Inc. and
Cablevision Systems Corp., expire on June 4, 2002, and may be terminated sooner
under some circumstances, as follows:

  .  principal cable partners may terminate all their exclusivity obligations
     upon a change in law that materially impairs some of their rights;

  .  Comcast or Cox may terminate all exclusivity obligations of our
     principal cable partners at any time if there is a change of control of
     TCI that results within 12 months in the incumbent TCI directors no
     longer constituting a majority of TCI's board. AT&T, TCI, Comcast and
     Cox have agreed, however, that AT&T's acquisition of TCI did not
     constitute a change of control under the terms of the original
     agreement;

  .  Comcast or Cox may terminate the exclusivity provisions of our principal
     cable partners if AT&T and its affiliates do not meet specified
     subscriber penetration levels for the @Home service. On June 4, 1999,
     Cox had this right, but Cox has agreed to waive it for 1999; and

  .  Comcast may terminate its own exclusivity obligations at any time if it
     allows us to repurchase a portion of Comcast's equity interest in
     Excite@Home. Comcast has informed us that it has entered into an
     agreement with Microsoft Corporation under which Microsoft can require
     Comcast to terminate its exclusivity obligations.

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<PAGE>

   In consideration for Cox's agreement to waive its right to terminate
exclusivity as of June 4, 1999, changes were made to the corporate governance
provisions of our certificate of incorporation and bylaws. These changes
generally require board action to be approved by a majority of our board,
including the board representatives of AT&T and either Cox or Comcast. In
addition, as further consideration for Cox's waiver, AT&T agreed to increase
its subscriber acquisition goals for the twelve months following June 4, 1999
above its current goal for that period.

   If the exclusivity obligations of our cable partners are terminated, this
could significantly harm our business and cause an immediate drop in our stock
price. We and our cable partners are continuing to explore the relationships we
will have after our exclusivity obligations expire as well as possible
strategic alternatives to our current relationships.

   We depend on our cable partners to promote our services and obtain new
subscribers

   The rate at which we are able to obtain new subscribers depends not only on
the degree to which our cable partners upgrade their cable systems but also on
the level and effectiveness of the efforts made by our cable partners to
promote our services. Our cable partners have achieved different levels of
subscriber penetration. In Canada, for example, where our cable partners have
high levels of upgraded cable systems, and faced early competition from other
providers of high speed data services, we have relatively high levels of
subscriber penetration that exceed those in the United States. Among our
principal U.S. cable partners, AT&T, Cox and Comcast are actively promoting our
services and are beginning to increase their penetration rates. Cablevision,
however, has deployed our service to only a small number of subscribers and
continues to offer its own online service called Optimum Online in certain of
its cable systems. We cannot predict the rate at which our cable partners will
add new subscribers to our services. If our cable partners do not actively and
effectively promote our services, we will not be able to reach the level of
subscribers necessary to achieve a profitable business model.

   We are controlled by AT&T, Cox and Comcast

   TCI controls approximately 57% of our voting power. AT&T owns TCI and
therefore controls this voting power. Currently, four of our eleven directors
are directors, officers or employees of TCI, AT&T or their affiliates. AT&T
currently owns all 30,800,000 outstanding shares of our Series B common stock,
each of which carries ten votes per share. This Series B common stock ownership
gives AT&T the right to elect five Series B directors, one of which is
designated by Comcast and one of which is designated by Cox. So long as AT&T
owns at least 15,400,000 shares of our Series B common stock and holds a
majority of our voting power, our board may take action only if approved by the
board and by at least 75%, or four of the five, of our Series B directors. As a
result, corporate actions generally require the approval of AT&T's three Series
B directors and one, or in some cases both, of the directors designated by
Comcast and Cox. Therefore, Comcast and Cox, acting together, may veto any
board action.

   We depend on a continuing cooperative relationship with AT&T, Cox, Comcast
and other large stockholders to take action that requires stockholder consent.
It is possible that AT&T's stockholders' objectives will diverge from what
management considers to be our optimum strategy.

   Warrants issued to our cable partners may result in additional dilution to
our stockholders

   We have entered into agreements with Cablevision, Rogers Cablesystems
Limited, Shaw Cablesystems Ltd. and other cable partners under which we issued
warrants to purchase shares of our Series A common stock. Under these
agreements, warrants to purchase 21,127,745 shares of our Series A common stock
at an average price of $5.25 per share were exercisable as of September 30,
1999. To the extent that Cablevision, Rogers, Shaw or other cable partners
become eligible to and exercise their warrants, our stockholders would
experience substantial dilution.

   We also may issue additional stock, or warrants to purchase stock, at prices
equal to or less than fair market value in connection with efforts to expand
distribution of the @Home service.

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<PAGE>

Risks Related to Our Narrowband Services

   Our narrowband services could lose users, advertisers and revenues to
competitors

   Our narrowband services compete with a number of companies both for users
and advertisers and, therefore, for revenues. We expect this competition will
intensify, particularly because there are few barriers to entry in this market.
These competitors include:

  .  Internet portal companies such as Disney's Go Network, Lycos, Netscape's
     Netcenter and Yahoo!;

  .  online service providers such as America Online and Microsoft's MSN
     service;

  .  large media companies such as CBS, NBC, Time Warner and USA Networks,
     Inc., who have announced initiatives to develop web services or partner
     with web companies; and

  .  providers of a wide variety of online information, entertainment and
     community services such as services that are targeted to vertical
     markets or electronic commerce services.

   Many providers of Internet services have been entering into distribution
arrangements, co-branding arrangements, content arrangements and other
strategic partnering arrangements with ISPs, online service providers,
providers of web browsers, operators of high-traffic web sites and other
businesses in an attempt to increase traffic and page views, thereby making
their web sites more attractive to advertisers while also making it more
difficult for consumers to link to services. To the extent that our direct
competitors or other web site operators are able to enter into successful
strategic relationships, these competitors and web sites could experience
increases in traffic and page views, or the traffic and page views on our
narrowband services could remain constant or decline, either of which could
have the effect of making these web sites appear more attractive to advertisers
and therefore could harm our business.

   Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories in the Internet market, greater
name recognition, larger customer bases and significantly greater financial,
technical and marketing resources than us. These competitors may be able to
undertake more extensive marketing campaigns, adopt more aggressive pricing
policies and make more attractive offers to potential employees, distribution
partners, advertisers and content providers. Further, it is possible that our
competitors could develop search and retrieval services or other online
services that are equal or superior to ours or that achieve greater market
acceptance than our offerings.

   The Internet in general, and our narrowband services specifically, also must
compete with traditional advertising media, such as print, radio and
television, for a share of advertisers' total advertising budgets. To the
extent that the Internet is not perceived as an effective advertising medium,
advertisers may be reluctant to devote a significant portion of their
advertising budgets to Internet advertising.

   If Internet users do not continue to use Internet portal sites, our business
could be harmed

   The success of our Internet portal web sites is also dependent on Internet
users continuing to use "portal" web sites for their information needs.
Internet measurement services have reported that the number of unique users of
Internet portal sites has been decreasing in recent periods. If Internet users
begin to become less dependent on portal sites, and instead go directly to
particular web sites, our traffic levels could decrease, which could make our
sites less attractive to advertisers.

  Our systems may not be able to accommodate increases in the number of users
  of our narrowband services

   Our web sites for the Excite Network are currently hosted and operated on a
computer network infrastructure separate from our broadband services. The
Excite Network must accommodate a high volume of traffic and deliver
frequently-updated information. The web sites for the Excite Network have in
the past, and may in the future, experience slower response times or other
problems for a variety of reasons. We also depend

                                       41
<PAGE>

on third party information providers to provide updated information and content
for these services on a timely basis. The Excite Network could experience
disruptions or interruption in service due to the failure or delay in the
transmission or receipt of this information. In addition, the Excite Network
users of these services depend on Internet service providers, online service
providers and other web site operators for access to the Excite Network. Each
of them has experienced significant outages in the past, and could experience
outages, delays and other difficulties due to system failures unrelated to our
systems. These types of occurrences could cause users to perceive the Excite
Network as not functioning properly and therefore cause them to use other
services.

   We depend on several third-party relationships for users, advertisers and
revenues

   We depend on a number of third-party relationships to provide users and
content for the Excite Network, including agreements for links to narrowband
services to be placed on high-traffic web sites and agreements for third
parties to provide content, games and e-mail for narrowband web sites. If these
relationships terminate and we are not able to replace them, we could lose
users or advertisers.

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<PAGE>

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

   The following discusses our exposure to market risk related to changes in
interest rates, equity prices and foreign currency exchange rates.

 Interest Rate Sensitivity.

   Short-Term Investments. We had short-term investments of $287 million at
September 30, 1999. These short-term investments consist of highly liquid
investments with original maturities at the date of purchase of between three
and twelve months. These investments are subject to interest rate risk and will
fall in value if market interest rates increase. A hypothetical increase in
market interest rates by 10 percent from levels at September 30, 1999 would
cause the fair value of these short-term investments to decline by an
immaterial amount. Because we are not required to sell these investments before
maturity, we have the ability to avoid realizing losses on these investments
due to a sudden change in market interest rates. However, we could choose to
sell these investments before maturity at a loss. Declines in interest rates
over time will, however, reduce our interest income.

   Outstanding Convertible Debt. At September 30, 1999, we had outstanding
long-term convertible debentures of approximately $234.5 million at a fixed
interest rate of 4%. In certain circumstances, we may be required to redeem
these debentures for our Series A common stock or cash. Because the interest
rate on these debentures are fixed, a hypothetical 10 percent decrease in
interest rates would not have a material impact on us. Increases in interest
rates could, however, increase the interest expense associated with future
borrowings by us, if any. We do not hedge against interest rate increases.

 Equity Price Risk.

   We own shares of common stock of certain public companies. We value these
investments using the closing fair market value stated in the Wall Street
Journal for the last day of each month. As a result, we reflect these
investments in our balance sheet at September 30 , 1999 at their market value
of $69.0 million, with the unrealized gains and losses excluded from earnings
and reported in the "Accumulated Other Comprehensive Income" component of
stockholders' equity. We do not hedge against equity price changes.

 Foreign Currency Exchange Rate Risk.

   Substantially all of our revenues are realized in U.S. dollars and most of
our revenues are from customers in the United States. Therefore, we do not
believe we face significant direct foreign currency exchange rate risk. We do
not hedge against foreign currency exchange rate changes.

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<PAGE>

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

   Sheldon Pittleman and Ralph Zonies each filed derivative lawsuits on behalf
of Excite@Home against AT&T and Messrs. Armstrong, Petrillo, Roberts, Woodrow,
Doerr, Hearst, Bell, Malone, Shaw and Jermoluk, who are our directors, in the
Court of Chancery of the State of Delaware on October 15, 1999. Excite@Home is
named as a normal defendant in each complaint. Each complaint alleges breaches
of fiduciary duty to Excite@Home and its public stockholders. As of the date of
this report, we had not yet filed responsive pleadings in either matter.
Mr. Pittleman and Mr. Zonies each seeks an injunction requiring us to alter our
corporate governance, including appointing new, unaffiliated directors,
damages, costs and attorneys' fees.

   GTE Internetworking Incorporated and GTE Intelligent Networking Services
Incorporated filed a lawsuit against TCI, Comcast Corporation and us in the
United States District Court for the Western District of Pennsylvania on
October 25, 1999. The complaint alleges violations of the federal antitrust
laws. GTE is seeking an injunction prohibiting continued performance under our
exclusive arrangements with our cable partners, damages, costs and attorneys'
fees. Although we have not yet filed responsive pleadings in this matter, we
intend to defend ourselves vigorously. However, if we do not prevail in this
action, our cable partners, when providing high speed data transport to
residential consumers, may be required to offer the services of other Internet
service providers in addition to the @Home Service. We may also be required to
pay substantial damages. Either of these results could seriously harm our
business, and could encourage others to initiate litigation on similar legal
theories in the future.

   We cannot assure you that we will prevail in any litigation. Regardless of
the outcome, any litigation may require us to incur significant litigation
expenses and may result in significant diversion of management.

Item 2. Changes in Securities

   In connection with our proposed acquisition of Hartford House, Ltd., we plan
to file a Certificate of Designation to designate a new series of preferred
stock. Upon the completion of the merger we will issue approximately 11,000
shares of this Series A non-voting convertible preferred stock to the
stockholders of Hartford House. Except as otherwise required by law, the
holders of Series A preferred stock will not be entitled to any voting rights.
Each share of Series A preferred stock will be convertible, at the option of
the holder, into 1000 shares of common stock according to a specified schedule.
Upon the close of business on the date on which AT&T no longer owns at least
15,400,000 shares of Series B common stock and securities representing a
majority of our outstanding voting power, all shares of Series A preferred
stock will be automatically converted in common stock. Each share of Series A
preferred stock will be entitled to receive dividends, when and if declared by
our board of directors out of legally available funds, equal to 1000 times the
aggregate per share amount of all cash or non-cash dividends, other than a
dividend payable in shares of Series A common stock. Likewise, upon our
liquidation, dissolution or winding-up, the holders of shares of Series A
preferred stock will be entitled to receive an aggregate amount per share equal
to 1000 times the aggregate amount to be distributed per share to the holders
of common stock, to be distributed ratably on a pari passu basis with the
common stock. The Series A preferred stock will not be redeemable.

Item 3. Defaults Upon Senior Securities

   Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

   Not applicable.

Item 5. Other Information

   On July 13, 1999, we entered into an Agreement and Plan of Merger to acquire
iMALL, Inc., a provider of electronic commerce services and solutions to small
and medium-sized businesses enabling them to sell their

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<PAGE>

products over the Internet, and announced a strategic agreement with First Data
Merchant Services, an electronic commerce payments solution provider.

   On August 17, 1999, we announced a content relationship and investment of
$55 million in Tickets.com, an online provider of sports and entertainment
tickets.

   On August 31, 1999, we announced strategic investments totaling more than
$45 million, including new investments in Rosenbluth Interactive, which
includes Biztravel.com, and in E-Stamp, and existing investments in General
Magic, Quokka Sports, WebMD and Webstakes.com.

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits.

  2.01  Agreement and Plan of Merger, dated October 23, 1999, between us and
       Hartford House, Ltd.*

  10.01  Form of Amendment Number Two to IRU Capacity Agreement, dated
        September 30, 1999, between  us and AT&T.

  27.01  Financial Data Schedule for the three months ended September 30,
        1999 (EDGAR version only).

  *We agree to furnish supplementally a copy of any omitted schedule to the
   Securities and Exchange Commission upon request.

(b) Current Reports on Form 8-K.

  On August 2, 1999, we filed a current report on Form 8-K dated July 12,
  1999 under Item 5 announcing that we had entered into an Agreement and Plan
  of Merger to acquire iMALL, Inc. and that we had entered into an e-commerce
  agreement with First Data.

  On August 13, 1999, we filed an amendment to our current report on Form 8-K
  dated May 28, 1999 to include historical financial statements of Excite,
  Inc. and pro forma financial statements.

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<PAGE>

                                   SIGNATURES

   Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                          AT HOME CORPORATION
                                          (Registrant)

Date: November 15, 1999                   By: /s/ Kenneth A. Goldman
                                             Senior Vice President and
                                             Chief Financial Officer
                                             (Principal Financial Officer)

                                             /s/ Robert A. Lerner
                                             Corporate Controller and
                                             Treasurer
                                             (Principal Accounting Officer)


                                       46
<PAGE>

                                 Exhibit Index

(a) Exhibits.

  2.01  Agreement and Plan Merger, dated October 23, 1999, between us and
       Hartford House, Ltd.

  10.01  Form of Amendment Number Two to IRU Capacity Agreement, dated
        September 30, 1999, between  us and AT&T.

  27.01  Financial Data Schedule for the three months ended September 30,
        1999 (EDGAR version only).