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Technology Stocks : America On-Line: will it survive ...?
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To: Scott Smith who wrote (5180)10/23/1997 3:05:00 PM
From: Keith O'Neill   of 13594
 
Scott, stock price is ultimately determined by profit making ability.
If you invest $90 in a bank CD you will profit a riskless $1.12 per
quarter, in AOL you will make 12 cents before charges, no insurance.
Even if AOL does make its optimistically projected $1.68/share next
year, the CD owner will have a guaranteed profit of $9.00 by that
time. AOL is more risk, less profit, and is overvalued by a factor
of 5. Would a rational investor sell a large cap stock with a P/E of
20 and buy AOL with a P/E around 200?

In order to survive AOL is transforming their business model to fit
the direction of the industry. But Yahoo is king of that hill and
AOL will just be one of many challengers. AOL has already sold their
prime advertising real estate, there aren't many big deals left. If
they don't deliver sales results to their current advertisers they
will have moved themselves into a fatal position.

Here's an interesting stock analysis site, it values AOL at $20.60.
Compare that with QNTM or INTC:

vectorvest.com
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