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Technology Stocks : America On-Line: will it survive ...?
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To: grogger who wrote (261)10/9/1996 9:03:00 AM
From: Richard Lyons   of 13594
 
He's my assessment, I'd like to hear others ...

AOL has a negative cash flow problem. They will likely be
announcing a poor quarter. This will hurt the stock price.

AOL has been testing a "flat rate" program on select
subscribers. Regardless of the outcome, they will use
this test to announce to their stock holders (at the
quarterly press release) that in their opinion the flat
rate scheme will not hurt their revenue picture.

Stock holders will be skeptical. The reduction in
revenue + poor quarterly results + negative cash flow
picture = stock holder dissatisfaction + lower stock
price.

Right now the company has a negative cash flow problem,
so growth investors will likely continue to sell. The
price isn't low enough yet (probably not until ~$18/sh)
to attract value orientated investors. My prediction
... this stock will continue to fall for a bit.
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