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Technology Stocks : America On-Line: will it survive ...?
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To: jack rand who wrote (870)12/22/1996 6:25:00 PM
From: Brian K Crawford   of 13594
 
Hi Jack. Good links. AdAge is a keeper. You in the biz?

The Webcrawler top 50 had 19 sites that are clearly chat related!
No, it's certainly not a fad. The latest interactive games that AOL is bringing on have chat as a built-in feature. Avatars in some. Next comes telephony.

Robertson Stephens estimates are for internet ad revs to double from $175 miil in '96 to $350 mill in '97. As good a guess as any, I guess.

AOL ad revs estimates for FYE 6/30/97 = $50 mill. Think they can do a double to $100 mill in FYE 6/30/98? I do. Easy. The ads are on all roads, including those leading to the chat rooms. Graffiti everywhere, yet not too objectionable.

AOL gross margins are purported to be 50% on ads (seems like they could be higher, it's just bits and bytes??). With around 100 mill shares out that would be $.50 per share, pre-tax, if they make the estimate in FYE 6/30/98. Add transactions, private net sales, etc. Assumptions are apparently for breakeven on member access. Full year net around $.80.

Do I interpret your comments to conclude that Ad growth on the web = loss of business for AOL? Isn't there plenty of growth opportunity for both channels?

The other question I have been puzzling over: Duncan Idaho tells us Disney is coming and will be formidable. Probably true on both counts. If the proprietary online business is doomed to be crushed under the combined weight of thousands of tiny web footed sites, why does Michael Eisner want in?

Keep up the good work,

Still long,

Brian
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