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Technology Stocks : America On-Line: will it survive ...?
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To: Duane L. Olson who wrote (348)10/15/1996 2:28:00 AM
From: Kashish King   of 13594
 
How much are AOL customers worth?

The only people I see buying AOL are Microsoft or AT&T or both. You could also make a case for Apple, Sun, Oracle or all three. Someone will get this customer base one way or another. They will be left on the current system then moved or at least transitioned to an internet based service by which time those services will be far superior to anything AOL has or could hope to develop -- armies of programmers using open standards versus a virtual handful of AOL developers in a closed, proprietary environment.

Now, let's talk price. Do we lure them over with a superior service and 6 months of free service or do we pay AOL the $120 outright and then a premium of, say, another $120 per head. That's $240 per head for an approximate total of 1.5 billion dollars. Let's say we don't want to wait for our lures to take hold and we just fork over the dough to AOL on the spot. We get 6 million paying customers, AOL's shareholders get 1.5 billion dollars. That's just under $14 a share.

But all of that is a pretty darn rosy scenario for AOL and it's more likely to be much worse. Time is not on AOL's side and they will be worth less and less as time passes. Excuse me, but I have to call my broker about a short sale, now.
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