Some interesting AOL numbers:
1) Revenue growth is off sharply. 76% vs. 120% prior quarter.
2) 365,000 new subscribers this quarter vs. 710,000 same period last year.
And here comes the whopper:
3) Each net subscriber gain cost AOL $356 vs. $268 last quarter.
Read about "the granddaddy of all computer-software bubble stocks, America Online, Inc." at
upside.com
"AOL, a company that was valued at more than $6 billion last spring now looks like a huge white elephant. AOL's 5,000 possibly redundant employees are staring into the monitors of $85 million worth of possibly redundant computers, or wandering the halls of more than $50 million worth of unneeded office space. As a result, at $25-plus per share, Wall Street is now figuring AOL to be worth not $6 billion but more like $2.75 billion. Yet even that figure is way too high."
"For one thing, AOL is currently selling at 92 times trailing earnings. By comparison, Microsoft Corp., the most valuable stock in the history of the computer software industry, is selling at only 38 times trailing earnings. Focusing simply on the balance sheet, AOL looks to be worth $9 per share at most."
"Here's why: Take the aforementioned computers and real estate (shown on AOL's balance sheet at about $100 million net of depreciation), plus $270 million in cash and (mostly) receivable, and you've got the only tangible assets the company has. Set off against that $370 million or so in assets are $310 million in liabilities and debts, nearly all of which has to be paid right away even though the company has only $129.1 million in cash and short-term investments with which to do it."
"The company's acquisitions, which have been relentless in the past year, aren't worth much, either. In August, AOL shelled out $14.5 million worth of its stock to acquire Imagi-Nation Network Inc., an on-line games company with $6 million in net assets, $12.7 million in revenues and a stupefying $19 million in cash-flow losses from its 1995 operations. Who'd want to buy that?"
"In fact, AOL's single most valuable "assets" are its tax loss carry-forwards. These totaled $415 million as of midsummer, and they now will assuredly grow as the $385 million write-off adds to the heap."
- There is more at the site above.
Regards |
