America On-Line: will it survive ...? Message Board

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Technology Stocks : America On-Line: will it survive ...?

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To: Todd Daniels who wrote (1961)	2/27/1997 9:15:00 AM
From: Joel Sternberg	of 13594

>>Completely electronic enrollment, billing and payment. No paper. And no experience. Neither Tel-Sav nor AOL have provided, sold, or supported CONSUMER LD service. This is far from a slam-dunk. Yet again I hear, as over three years, `rational scenarios' pointing to big bucks profits. None of the `rational scenarios/estimates' have panned out before. Why now? < Perhaps we can do a little math here. Let's assume that 1 of 8 million AOL members sign up for Tel-Save. Let's say they each spend $50 a month or $600 a year on long distance. That is $600 million in extra revenue for the tiny $276 million Tel-Save. Now, if we assume a 20% margin, Tel-Save will bring in an extra $120 million in profits per year. How much of that would they be sharing with AOL, which after all is also getting warrants in the company. Mind you, I think that 1 million AOL customers is orders of magnitude too high, and $50 a month is probably too high as well. Does it add up to much for AOL? I guess the response is that this is just one of a flood of businesses that will be joining the AOL team.

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