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Technology Stocks : America On-Line: will it survive ...?
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To: cody andre who wrote ()11/17/1996 9:43:00 AM
From: jack rand   of 13594
 
Re. Barron's 11/18 rountable of tech stock fund managers,
Here's a note I sent to B.

If you asked messrs. Morris and Wick opinion of
a cable or media company they'd look at you funny
and say, `not my bag'.

It is therefore bemusing to see guys steeped in
silicon and plumbing stocks asserting not only
expertise about online services, but offering
as reason to buy AOL that the company can
re-create itself to a `cable model' --
terribly flawed though the analogy is, and
greatest support for which is giant leap of
faith (and quantification only to a squishy
`big, someday') that just because a company
says it is changing its business model it will
be able to successfully do so.

And notion that Sprint or MCI or AT&T would buy
AOL because they could by dint of owning phone
lines `immediately make AOL profitable' is just
facile bs. Ask a telephone analyst.
Those companies just don't think or account
that way -- and certainly not any price AOL
would today consider. And anyone who really
knows the story knows that Sprint, which still
owns 4% of AOL and provides 45% of its telecom,
has past point of anything further with AOL,
which has punctuated that by signing BBN as
prime contractor for its AOLNet replacement of
SprintNet. (Also check out the Sprint/Blockbuster
Internet Passport ads breaking on TV this weekend--
in national prime time AOL can't afford)

When smart money starts presuming expertise
it doesn't have, I'm emboldened to take the
other side of its trades.
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