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Technology Stocks : America On-Line: will it survive ...?
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To: cody andre who wrote ()2/16/1997 7:59:00 AM
From: Zoltan!   of 13594
 
Sunday's New York Times slams AOL management again. nytimes.com

In the business section, "Stock Prices Reflect Cleaner Balance Sheets", notes that businesses have been cleaning up their acts about reporting phony earnings but NOT AOL. AOL is made a prime example of deceptive accounting.

One thing, a BIG thing, not mentioned in the story is another reason that AOL took that big restructuring charge. It had little to do with responding to AOL critics or a new business "model". It was all about reporting future "earnings".

AOL's "deferred subscriber acquisition costs" were about to start being amortized this year, making the prospect of reporting any earnings in the near to intermediate term future highly dubious. The "restructuring" was a device to dump all the marketing costs on the balance sheet without them ever appearing on the income statement.

That act virtually eliminated net worth, but gave AOL a better shot at reporting "earnings" in upcoming periods.

AOL's aim has alway been to shift expenses out of reporting periods whenever it could. In the past, expenses were assigned to the future. Recently, the "restructuring" put it all in the past.

AOL deserves its reputation. What will we find out tomorrow?

Regards

BTW, Upside (March 01) upside.com
Focuses on long term value creation and cites AOL's bad performance and "questionable growth".
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