America On-Line: will it survive ...? Message Board

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Technology Stocks : America On-Line: will it survive ...?

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To: cody andre who wrote ()	11/17/1996 6:30:00 PM
From: Bharat Bhatia	of 13594

I have to disagree with this guy in Barron's who views AOL not as a competitor of AT&T, Sprint & other teleco but as an acquisition candidate. These companies have their own internet services and have invested a lot into them. I doubt if they would buy AOL now at it's current valuation. Recently , Microsoft announced they would lose money in their internet business for at least three years on their 300 million per year investment in MSN. Microsoft makes money from other resources to have the luxury to lose money in the internet. Where is AOL going to get cash to be able to keep with MSN and other challenges they are facing. The new pricing will hurt them. People who are content using 5-6 hrs don't want to pay 19.95 per month. People who use a lot of hrs will now be paying less only 19.95 per month. ie. AOL will be making less money for more hours of usage. AOL has yet to make a profit, and it would be increasingly difficult to make profit in the future. Their percentage growth in all critical areas has slowed down. Pretty soon there will be an equity offering to meet cash needs. It's hard to justify higher stock price for AOL based on ad revenues.

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