aol - your choice on buy, sell or hold
i like aol's market position
Of all the Internet stocks I see AOL as the leader with the most leverage. Here's what I like about it: 1) largest ISP in the world with 17 million people paying $21.95 month; 2) Netscape (the Website and software); 3) ICQ, the instant message service with more than 30 million users; 4) capital to ride out interest rate storms 5) stock to acquire with (which AOL has been too quiet with I think).
Risks and downsides that AOL needs to address: One of the larger issues facing AOL is one I brought up way back in the quiet years of January 1998: broadband strategy and highspeed distribution. I suggested then that AOL should have acquired cable Internet service provider @Home. Too late now, AT&T owns majority through its buy of TCI.
AOL chose to go the court battle way with its "open cable" argument (which may or may not succeed). I think AOL buying into the cable franchise world is a better move.
AOL was in the dial-up network business and built critical mass that way. It should think of broadband as a new business which it needs to build up in similar evolution. That means AOL owning a cable system or two, or three.
AT&T, Paul Allen's Vulcan Ventures, Microsoft, they all get that owning a cable stake is leverage.
Showing up with 17 million dial up subscribers is valuable but AOL ought to cut a deal with some cable firms and get going. I think cable should be open to those that want access but only open for those willing to pay to upgrade the cable system to be able to handle two-way data flow.
AOL has the cash, cache, and stock as currency, maybe it's time to cut some deals with Malone, Turner, Redstone and/or Levin. I could see an AOL-Time Warner powerhouse combine, especially with Time Warner's Road Runner cable Internet.
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