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Technology Stocks : America On-Line: will it survive ...?
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To: Stratajema who wrote (121)9/11/1996 7:04:00 PM
From: Mark The Trader   of 13594
 
I would not consider AOL small cap, it has a market value of over 1 billion ( dont have the numbers with me ). Someone posted here about AOL revising there pricing structure in the near future, lower cost and more hours to subscribers, If this is true than the stock could be selling off in anticipation of this. To sum it up it means less earnings for the company. ALso Duncan in a previous post made a great comment on how AOL does not expense advertising costs but capitalizes them over a 24 month period. Well thats real aggressive and I am surprised that the accounting firm who audits AOL allows such a accounting method. To put it in laymans terms by capitalizing over a 24 month period AOl is saying that each new subscriber will remain with AOl for 2 years. Thats real aggressive accounting and does not in my opinion truly match revenue with expenses. If they did not capitalize
expenses over such a long time period I dont think they would have much earnings to show. This could snow ball on them in the future, If they start to lose more subscribers they will have to be more conservative in their expense capitalization and that will kill earnings at some point in the future. I was an accountant for 12 years , I know all about accruing and capitalization bullshit to make the bottom line look better.

Mark
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