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: Allen Plyler who wrote (157)	9/21/1996 4:37:00 PM
From: Mark The Trader	of 13594

A high P/E is ok for a company that will grow earnings at a fast rate. I dont think this will be the case for AOL, Without going into detail and rehashing what I have said in prior posts, one of the biggest concerns to AOL is the competition that providers cheaper and much better internet access. Also AOL uses very aggressive accounting to recognize revenue and is capitalizing certain major expenses over a 1 to 2 year period. Well eventually that will catch up with them. Basically the deferred expenses could increase with respect to revenues in later periods. Considering that Wall street only cares about margins , this could hurt AOL in the next year. They spend a lot of money on advertising , and I dont think that the subscriber base will grow enough to support the expense increase in the coming years. Mark

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