Will the new Compuserve IPO pull away some money from AOL stock price? AOL is kind of like Gulliver with the Lilliputians little bit by little bit tying it down. It has had the advantage of high margins with large subsciber growth, but their brand of internet is last year's news. People want the vast stimulation of the WWW, and who is going to keep paying exorbitant fees when you can get your own web page and unlimitted access to the WEB for $15.99/month on some services. Day by day, services rivalling AOL's commercial ones are announced for the WWW in conjunction with the likes of Netscape or Microsoft or Netcom, etc. Yesterday, the Gartner Group announced their intention to set up financial information services in cooperation with Netscape (some for free, some for a small price). I find this Silicon Investor quite handy. The barriers to entry in this internet access market are far to low to justify the capitalization that AOL stock price represents. The stock I believe, has more than tripled in the past year. Their accounting practices have been questioned in these forums, I wonder how they handle the accounting of subscriber growth when a huge percentage of people use the service for the 10 hour trial period over and over again, never adding to revenue. To just maintain their present subscribers, they will have to lower their prices and margins. Nearly every tech group (chips, many internet stocks, computers, software, telecommunications, and even networkers recently) have had substantive corrections in the past 9 months. This stock is overly ripe with its present P/E, and I expect it to fall from the tech tree pretty soon.
How's that for doom and gloom? Otherwise I like the company:=)
Rick D
The Fat Lady hasn't sung yet, but she's in the bullpen warming up. |
