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 (1025)	1/12/1997 12:22:00 AM
From: Brian K Crawford	of 13594

Details about AOL comments made at Morgan Stanley Conference I found the following post on The Motley Fool. I am posting here with original poster's header. I did not get their permission, so SF FAN1, if you are lurking here too, hope you don't mind! <<Subj: Morgan Stanley Conference Date: 97-01-11 09:34:33 EST From: SF FAN1 Had the chance to sit in on the presentation by Ted Leonsis at the MS Conference. I'll venture this is the reason the stock rocketed on Friday. His points. Subscriber count is rapidly approaching 8 million Revenues are at a $1.6 billion run rate Advertising revs are up to $250 million run rate By the end of 1997 - over 10m subs and $2.0 billion in revs No direct churn numbers but he did say that churn was way down and that 4Q churn numbers should be equal to the rates during "the old days of AOL." More importantly, he clearly laid out how AOL makes money long term by comparing the on-line market to the cable industry and how the money moved from Infrastructure buildout to Audience Amalgamators to Original Content Brands. He believes that there will eventually only be 20 "megabrands" on the Net and that AOL will be one of them. He also compared Digital City to local television affiliates and suggested that the ISP market will shake out soon. AOL is currently considering signing up with ISP's to act as local AOL affiliates. So how does AOL make money? Some of his thoughts There are currently 15 million IM's sent daily - why not attach a small brand logo to each one? Over 3 million people use Buddy Lists Two advertisers have committed over $5 million to AOL, this is just a start. AOL is actively building "affinity networks" for big advertisers like Reebok at 55-60% margins AOL has a big advertising advantage over the Net because AOL can directly track all usage by its members. Much easier to sell advertising with this complete info. AOL "stores" generate $45-50 million annually for companies like Tower Records and 1-800 Flowers versus $2-3 million for traditional "bricks and mortal" locations. Expect AOL to raise fees in the future. Lower churn = lower marketing costs. The savings are being reinvested back into the network ASAP. Adding 20,000 modems per month but still believes it will take 60-120 days to solve the access problem. There was more but I'm getting carpal tunnel. Bottom line, he stressed the brand name aspect of AOL and how the market wasn't giving the company credit for its franchise.>> Thank you, SF FAN1, Brian

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