Thanks for your analysis. Here is my take on AOL. Please tell me whether you agree. In order for AOL to stay out in front, they must stay on the leading edge of content. After all, if they don't have the content, there is no reason to pay a premium for the service. Right now they may well have the best content, and whether it is worth the premium is a matter of opinion. My concern, is what makes us think that AOL can stay out ahead in terms of content? The best content seems to gravitate to the web where it can be viewed by the largest audience, so it is up to AOL to develop stuff in-house, at which they don't really have any track record.
--Please comment on the above part. The rest is pure opinion----
On the other hand, where as Microsoft similary has no track record, they sure have deep pockets and are willing to lose about $3 billion over the next few years developing the service. Basically, I see AOL as channel(s) on the web--a channel among countless offerings. If they cannot support the latest business model (again, a matter of opinion) then the value of the company is the value of their subscriber base, which I agree, competitors would kill for. Still, I put that at about $250 per subscriber, which would give AOL a value of about $20-22 per share. I am even willing to increase my valuation of them as they garner more subscribers. |
