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: (Bob) Zumbrunnen who wrote (1200)	1/28/1997 9:28:00 AM
From: John Howell	of 13594

Bob, I agree with your analysis that AOL will have to add a massive amount of capacity before it can service its subscriber base. Their problem is that that kind of expenditure blows big holes into an already porous business plan. AOL's statement last quarter was that it would become profitable by selling advertising when people logged in to enjoy their content. The recent negative pub regarding lack of capacity, combined with a business strategy dependent on an ad revenue model spells disaster for this outfit. If Case wanted to be the Bill Gates of the Internet he would have had to start converting from a BBS to an ISP years ago and established himself as "the" brand name for ISP service. The rumours of a buyout are also laughable. Why would a Baby Bell want to buy a bulletin board system when they are already providing Internet service at a fraction of the overhead rate that it costs AOL? More importantly, why buy now when you can get it for ten cents on the dollar in 4 months? When small "businesses" run operations with a structure similar to AOL's they end up on the 5 o'clock news as Ponzi scams. Stay short!

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