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Technology Stocks : America On-Line: will it survive ...?
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To: Brent D. Beal who wrote (4626)8/29/1997 12:23:00 PM
From: steve lipson   of 13594
 
Brent: Have you ever heard of normalized earnings?

There are a whole host of situations where a P/E of a gazillion indicates that the information is simply not relevant. The earnings base may be very small, as in an emerging growth company, or earnings may be cyclically depressed. How do you value companies with a loss, since there is no P/E? Would you try to tell me categorically that it is impossible to find a money-losing company that will be a profitable investment?

I'm getting hopelessly confused about your personal estimate of 50 cents a share. Is that for this calendar year, calendar 1998, or AOL's fiscal year that just began.

I'm absolutely looking for this company to make more money than that (in calendar 1998) and bring its P/E down to earth by ramping up earnings. I think there are plenty of good reasons to at least weigh the odds that the past record is misleading and that the company is in a position to start earning meaningful profits, as well as grow them at a rapid rate. For what it's worth -- which is quite often very little, I'll admit -- that position would appear to be in line with the current analyst consensus and the net of other investor opinion.

You are the one who was chortling about each day's zigs and zags in the stock price, at least as long as the stock went down at the end of the day. If you now are telling me that all you look at is long-term fundamentals, good, that's what I do. We know where we each stand. Let's sit back for at least a couple of quarters and see who had the better read on the company.
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