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

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Andrew Shih who wrote (7474)	2/11/1998 1:55:00 AM
From: Mike C	of 13594

Future revenues - Andrew, both you and Craig are posting good insight into the subtile points of AOL's future business. Many of Wall Street's darlings with high multiples have some monopolistic edge on their competition. The monopoly arises from, overwhelming momentum and market presence - Microsoft, or Technical know how - Intel. Any competition faces a daunting task in overwhelming such market or technical strengths. AOL could be considered monopolistic or as only currently market dominant. The reason for their lead, in my opinion, stems from their distribution campaign where a dozen CDRoms are sent to nearly anyone with an address. When a new computer user decides to go online he can always find a disk, pop it in and be up and running. My local ISP required two days of my time for correct operation. The computer neophyte is unwilling to face the difficulty of or unable to easily change providers. This provides some level of member sticking power even with price increases. If AOL grew to 100 million subscribers we could be talking Super Bowl like ad revenue. The outlook question at hand is what does the member future look like? Herein lies the key to this stock's growth potential. You and I couldn't hope to fabricate a 10 million transistor computer chip in our basement but we could make a good stab at being a decent ISP. Neophyte computer users may begin to appreciate that there are other ISP's with equal setup conveniences and there is the impact of new technology as discussed. All these issues weaken any monopolistic shading for any one ISP and are most dangerous for the leader. This brings us to the most important missed point - RATE OF GROWTH of New members. Not the 1 million or so new subscribers mentioned but the RATE of this increase. True, the number of new members is increasing but the rate of this increase shows a beginning down trend. This projects to a finite number of users in the near future ( not 100 million by the way) and, as we have all appreciated on this thread, AOL's potential for revenue is heavily dependent on the number of EYES. Plot Compuserves's new member numbers over the last ten years for an interesting comparison. The whole picture can be clouded by the potential for foreign deals and joint ventures - What do you think? Mike C.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next