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: Pancho Villa who wrote (8059)	2/21/1998 11:06:00 AM
From: Investor-ex!	Read Replies (2) of 13594

Pancho, Key points in the 10K: revenue base is growing at a high rate, but company is still very concerned about diminishing costs due to flat rate pricing in light of increased use per member. This is the key reason for the $2 hike. IMO usage per customer may be going up at an alarming rate. If AOL starts experiencing costly increases in per client usage, all they have to do is take an appropriate number of their modems off-line. It has already been demonstrated that AOL can grossly over-subscribe their infrastructure and suffer very little in the way of consequences. If an AOL member has a problem with this, they can simply call AOL's excellent customer service department and express their concerns. :-) Actually, one would think that high usage rates would improve their bargaining position with advertisers, unless their clients are quickly jumping to the Internet after logging on, or turning off the AOL ads, or not clicking on any of the AOL ads, or most of the AOL's ad deals are at pre-negotiated fixed rates and new deals are thinning out. Have you considered a "covered" short sale? i.e., maybe short some shares and then sell some nice fat, near the money puts.

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