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Technology Stocks : America On-Line: will it survive ...?
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To: Shafiq Ebrahim who wrote (1577)2/7/1997 1:19:00 PM
From: John Howell   of 13594
 
Shafiq,

I used to consider claims of MM manipulation mostly sour grapes. AOL has changed my mind forever on that subject.

Consider today that analysts are widening 3rd quarter loss projections while issuing buy recimmendations. They are using jargon such as "unexpected infrastructure buildout costs" for the fact that AOL will have to buy additional capacity over the 3rd quarter. I mean, excuse me but since when did anyone in an ISP or BBS not anticipate additional infrastructure costs associated with growth? The MM's are trying to spin the fact that AOL outsold their capacity and act like infrastructure expansion will be a onetime unexpected charge. In the same breath they say that they expect 10,000 million subscribers by year end. By any acceptable standard this company should have 800,000 modems to properly serve that large a customer base.

I won't belabor the point. This company has no business model which will allow it to become profitable, unless you believe the ad revenue and transaction processing projections they are making.

Considering AOL's past history of outright deception I find it hilarious that the so-called Wall Street experts are lining up to pimp for this company. "Projections" and "forecasts" have simply lost touch with anything approaching reality. Constant negative revisions have little or no effect on the stock price.

When this one falls, its going to fall hard.
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