Finally!
NYTimes reports today that:
"No one has doubted America Online's ability to generate growth, with
revenues running at the rate of $1 billion a year. But critics say the cost of that growth has been too high. In fact, they say, if the company did not capitalize much of its marketing costs -- putting them on the balance sheet to stretch out the impact on profits -- it would have no earnings."
-So at last the "grey lady" has reported that AOL makes no profits. That is progress. I wonder how many of their readers bought AOL stock when the NYT and others acted as AOL's press agents?
"Nor, they add, does America Online's business model seem to hold out any prospect for sizable profits, ever."
-True, all their projections are pie-in-the-sky.
"On Monday, Case conceded that its main source of revenue, monthly
subscriber payments, was not where America Online would make money. Instead, the profits will come from advertising, fees from on-line commerce and even the setting up of private "intranets," he said."
-Why did they leave out fast food and cruises?
"Already it is setting up a special-purpose private network connecting
Hewlett-Packard with retail-store managers handling its computers and
printers, and an America Online intranet at the Harvard business school allows professors to post information that students can use in their case studies. "
-Wrongo. I believe I read Harvard students have resoundingly voted to throw AOL out. As Barron's has reported the setting up of "private intranets" for businesses is the untold story where CompuServe has been booming and from which it will return to real profitability. Given AOL's manifest unreliability and truly inferior infrastructure they should find it difficult to compete in a more discerning market.
I believe Case just threw this in as part of his usual hype.
It should be remembered that AOL execs receive an unusual % of their remuneration from their options plans. That has driven the hype and bizarre accounting. It is a good sign that the press is somewhat skeptical of their bluster.
The NYT article is at:
nytimes.com
Regards |
