From Keith Benjamin's (BancBoston) weekly newsletter.(courtesy the Yahoo thread)
AOL TAKES ANOTHER TECHNOLOGY STEP ^Ö We expect another record quarter in March, with upside to all forward estimates. Contrary to some confusion, we understand the SEC has already approved the pooling treatment of the Netscape acquisition, suggesting no incremental amortization charges to our estimates. AOL keeps growing into its roughly $160 billion market value. AOL closed of its Netscape merger and announced plans to integrate Netscape as part of a broader re-organization, with the new AOL comprised of four divisions: The Interactive Services Group (AOL, CompServe, broadband, etc.), The Interactive Properties Group (ICQ, Digital City, MovieFone, etc.), The Netscape Enterprise Group (focus on Netscape^Òs corporate customers and the strategic relationship with Sun), and The AOL International Group. With Netscape, AOL moves further to capturing more business at work.
With CompuServe , Web-based services like ICQ, and now the Netscape browser and Netcenter service, AOL is catching you at the office. With Netscape^Òs server software business, AOL will now help its commerce partners move faster. AOL can essentially offer the virtual store, the cash register, and the customers, leaving just the products to be supplied by the retailer. We like the risk/reward of how the deal isstructured, with Sun covering much of the risk. Sun will resell Netscape e-commerce software, and pay AOL rather high minimums. In terms of rewards, AOL will earn money directly from software sales and indirectly from more commerce flowing through AOL. In addition, Sun can
help AOL move its service to the emerging Web-appliance platforms. In sum, we still view AOL as the core holding, although we are more focused on accumulating other stocks short term. |
