ISP provision has become a commodity business. Any additional revenue must come from advertisers or people wanting to pay for high quality content.
Consider the on-line world in 2 years. The on-line public will want those services that require large amounts of bandwidth (high quality graphics, real time motion, capacity for transfer of large data sets, etc.). If I'm in the financial services sector, where am I going to advertise? I'll advertise with those entities (Lombard, e-Schwab, etc.) that people depend on to transact business. How much of my ad dollar will I devote to a sight where frustrated girlfriends and housewives go to bitch about their boyfriends and husbands (currently the most popular AOL destination), or where kids go to send e-mail? Likewise, if I'm in the entertainment industry, won't most of my on-line ad budget be spent with the providers of shit-hot games with real-time graphics (again, bandwidth)?
If I'm an investor, will I be willing to depend on AOL (a company whose stated infrastructure goal is a 30/1 customer to modem ratio) to provide me with access to time-critical data capture and business transaction facilities? Personally, I'm going to be doing business with the company that puts fiber to my door.
If I'm a gamer, which sites will I be spending my entertainment dollar on? What about scientific research, personal and business communications, banking, etc.?
Simply put, AOL is incapable of pursuing the future growth areas of the information age. Communications companies are. That's where the money is. Combine that with a management team that can't put out a credible earnings statement and then ask yourself if you want to invest in this company over the long haul. |
