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Technology Stocks : America On-Line: will it survive ...?
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To: Bob Cook who wrote (800)12/13/1996 10:28:00 PM
From: jack rand   of 13594
 
All of this 75%, more info stuff misses the essential question:

If AOL is providing it and charging a rate at which others who
are not can't make money, how does AOL? AOL says advertising and
transactions. But it's a looong way from demonstrating it can
do so to point of sustained profit.

At the Internet World show some local NYC ISPs introduced
$14.95 flat rate plans. I don't know how they plan to eat on
that. But the point is, AOL is extremely vulnerable to further
price competition -- especially from the Bells, AT&T, MCI, Sprint;
who I guarantee will escalate bundling deals of Internet with
voice -- as well as promote no-minimum $1/hr. plans to entice
newbies. AOL can't afford such plans -- clobbers predictability
of cash flow.

The first serious breach of $19.95 by a major contender will
send AOL into a tailspin. (Maybe even MSN before the Bells --
since MSFT charges MSN losses as R&D which is capitalized and
doesn't hit earnings). Prediction: it will happen well within
6 months.
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