Having listened to several hours of punditry on the subject of AOL/TW I had a Yogi moment...there was something awfully familiar about the blah, blah coming from these folks. Maybe it was the repeated use of the words leverage, content and convergence that rang a bell somewhere in the dark recesses of my mind...
I think that the funniest remark of all was from one "major" 'net analyst who said that the deal "validates the internet stock valuations"...uh, hello? Let me get this straight, AOL buys TW with money raised through the internet mania and with its inflated stock price and this somehow validates the price? After all, its not really TW that's buying AOL, its the other way around.
Well, so much for that. At any rate, what really struck me was how similar all the gas passing today was to just a few years ago when our dear buddies, the Japanese, decided that content and hardware were converging. Remember? You know, Sony bought Columbia pictures, Columbia records...Matsushita bought Paramount, etc. The same analysts(or their older brothers) were blathering on back then about the natural marriage of content with TV's, VCR's, Discman, etc. It was the inevitable trend of the coming years.
'Course, it didn't quite work out that way. Sony has floundered around for years with their "content" assets, Matsushita unloaded Paramount at a nice loss and the whole idea of leveraging hardware through content passed quietly into that good night.
Yet, here we are again. The anal-ists are saying that this is the way the future will be. Vertically integrated communications company's, developing content, delivering it and leveraging every step of the way. It sounds so nice...
What I see is a company(AOL-TW) that will be growing revenues and profits at 15-20%, but will have a stock that's selling at 10X revenues and 100+x earnings. It will be a company that simply can't grow much faster than that and won't be able to leverage all the profits that they think they will.
So, it struck me that today(or someday very soon) will likely be the highwater mark for AOL. Like the Confederates at Gettysburg, Hanibal before the gates of Rome, Napoleon at Waterloo...the very brightest hour seen to date, turns out to be the brightest hour they will ever see...
Just a thought...share yours.
Regards,
WTS |
