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Technology Stocks : America On-Line: will it survive ...?
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To: steve lipson who wrote (269)10/10/1996 2:12:00 PM
From: Zoltan!   of 13594
 
If I recall correctly, didn't CUC charge members an annual fee up front with the promise of a 100% refund anytime during the first year?

Hence their deferral. AOL's deferral is a diversion.

To create paper profits AOL extended premises w/o real basis. In effect, they bought favorable press and time.

Cash flow is usually considered a better measure of how well a business is doing than mere profitability, i.e., better to show a loss with positive CF than a "profit" with negative CF.

AOL's CF is reportedly negative. Last Spring it was revealed AOL spent $240 for each net new member. That figure should go up with the massive new ad costs. This means AOL should face a crippling cash shortage And a return trip to the equity and/or credit markets for new funds.

Regards
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