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Technology Stocks : America On-Line: will it survive ...?
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To: Brian K Crawford who wrote (2623)3/31/1997 8:08:00 PM
From: Todd Daniels   of 13594
 
>Do you share the belief that AOL's ultimate fate is a buyout by
>T at [insert a lower price than today] per share?

1) If AOL had the slightest notion of such possibility, would it
have committed to Tel-Save for three years?

2) T made it crystal clear in its press conference last month
that it had no designs on being in the content business; that
it has been pursuing access alone and in a manner and at pace
that it claims has allowed it already to be profitable.

3) The new regime at T seems far less likely than the Allen one
to think about stuff like acquiring AOL. At best it would look
way out of whack with the focus and initiatives Walter's articulated;
and with the pressing problems and much larger markets of T's concern.

AOL has been scrutinized by everyone from T to Disney.

There is no way on an asset or earnings basis that acquisition can be justified at any price near what AOL would consider acceptable (north of $70). The largest `asset' is the subscriber base; but that's too fragile upon which alone to base a buyout valuation. By offering a steep discount, T could probably grab 25%-50% or more of AOL's base
for much less than 25%-50% of the cost of acquiring it. Ditto MSFT.

What AOL doesn't have that T, MSFT, DIS etc. have in spades is TIME.
It's gotta start performing financially soon.
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