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Technology Stocks : America On-Line: will it survive ...?
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To: steve lipson who wrote (5745)11/11/1997 12:40:00 PM
From: S. maltophilia  Read Replies (3) of 13594
 
Very interesting quote from Seidman. Here's some more of it that didn't get copied in your excerpt:

Unfortunately for AOL, the profit margins are really weak. There's
nothing wrong with $19.2 million, but as a percentage of revenue, profit
is less than 4 percent. AOL's on a run rate for revenue of more than $2
billion a year, and profits of well less than $100 million.

Also, while the year-over-year revenue and profits look mostly good for
the September quarter (though operating profit was actually down $12
million or so vs. the same period last year), AOL's quarter-over-quarter
growth was not as strong. Online services revenue was up more than 12
percent vs. the quarter ended June 30 and, considering AOL grew its
subscriber base by only about 9 percent during the September quarter,
that's pretty good. But AOL is putting a lot of emphasis on "Other
revenues," which were down more than $2 million vs. the June quarter.
Some of this may be as a result of performance of the "soon to be
WorldCom's" ANS division, but I read that the straight advertising and
commerce dollars were $68 million in the September quarter vs. $80
million in the previous quarter. AOL attributes the difference to
more conservative accounting. It did over $100 million in advertising
deals during the September quarter that in the old days it probably
would have taken total credit for in the September quarter. Now they
are booking the revenues over the duration of the deals. AOL also said
that it began charging refunds and other credits related to online services
against other revenues instead of online services revenues.
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