Eric, I think you're right about brokerages liking the idea of a name-brand internet play. Whether AOL can develop a viable long-term business model seems to me still an open question. Longer term, given a world with digital TV and more bandwidth, if AOL adjusts to that world and lets people download, say, movies or live events on a pay-per-view basis, that might help. If they can get the advertising model to work, that might help, though as someone on this thread pointed out, there are only so many good sites for advertising. If they can get online vendors to cough up enough cash, that might help. Without some dramatic change in their business model, they will wind up being a very large ISP with very thin margins, IMO, not a good place to be. Until that question about AOL's future direction is answered--megasales machine or gas company--the stock will trade at a premium, yet another triumph of hope over reason. It seems to me impossible to predict when we will know the answer.
Best,
Steve |
