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Technology Stocks : America On-Line: will it survive ...?
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To: Todd Daniels who wrote (1912)2/26/1997 11:43:00 AM
From: Joel Sternberg   of 13594
 
>Actually, the $100m is a LOAN.

As Bloomberg reports, AOL pays back the $100m by
at least $4.3m per quarter over next 10 quarters and
$57m balance by end. Commisions from sale of Tel-Save
(gimme a break) offset those repayments.

Amazing. AOL will try to sell a third-rate long distance
service to subscribers who are having problems dialing into
AOL.

And re. Tel-Sav, so much for `best of breed'.

Can't wait to see subs reaction as more and more `buy me' screens
hit 'em on log-in; and start to get junk mail `put these stickers
on your phone' from AOL.<

Wow, this must be relatively recent. I did not see this yesterday on Bloomberg. This "alliance" has even less than meets the eye. I know it did not make sense from the start. Supposedly the $100 million was an advance on marketing fees (as a percent of revenue generated) to be paid by Tele-Save in the future. But, the company did only $237 million revenues, so how could AOL generate $100 million in marketing fees out of the deal? Still, AOL desperately needed the advance regardless of where it came. Apparently, AOL feels its stock would tank if they had to announce another secondary at this time. This will tide them over for awhile. They better hope the market doesn't crash in the interim or they would be lucky to fetch $20/share in a secondary.
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