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Technology Stocks : America On-Line: will it survive ...?
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To: Todd Daniels who wrote (1726)2/14/1997 2:45:00 PM
From: jack rand   of 13594
 
Todd, looks like there's more.

MF's 2/10 recap of the earning conference call reports that AOL said
$25 million of the $74m restructuring charge is for restructuring of
information provider agreements to reflect move from time-based sub
billing and IP compensation, to new deals under flat rate.

As I understand it, the $25m is to account for payments made under the
old plans, some of which remain in force until sometime in Q3. And I
hear that AOL hasn't yet renegotiated with all IPs and still is
compensating them on the pre-Dec 1 usage basis.

In other words, some of the $25 million charged in Q2 appears to be
for expenses that will be paid BUT NOT BOOKED in Q3. How much I don't
know.

I'm not sure about accounting basis for this one. AOL has constantly
renegotiated with providers. i.e. Why moving to flat rate (something
not forced as were refunds by the Attorney Generals) should be event
that constitutes basis for shifted charges.

Not to mention that AOL has changed pricing before, as do lots of
companies. If McDonalds went to all you can eat flat rate, would it
be able to take special and quarter shifted charge for renegotiating
contracts with suppliers to reflect the pricing change? I don't know.
But I do bet that analysts sure would take notice.
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