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Technology Stocks : America On-Line (AOL)
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To: TARADO96 who wrote (36134)12/29/1999 9:25:00 PM
From: Steve Robinett  Read Replies (1) of 41369
 
--John
Two points.
First, the most recent statement from AOL claims 20 million subscribers (http://news.cnet.com/news/0-1005-200-1499460.html?tag=) and points to a one million subscriber increase from 19 to 20 million between October and the date of the announcement in mid-December. Even compounded, that 2 month gain of one million subscribers suggests a 36% annual growth rate. (Mary Meeker's 50 million includes ICQ and AIM users.) I don't believe AOL's actual annual subscriber growth rate will come out at 36% but it does indicate a decrease from the torrid historical pace.

Second, the more important question, as you have often pointed out, is growth in high-margin advertising and e-commerce revenue, currently about 23% of total revenues. Last quarter, I considered extremely good on almost all measures of growth. I anticipate that the quarter to be reported in mid-January will be equally solid. I also anticipate that Wall Street will begin discounting the potentially good results from the upcoming quarter sometime in the next couple of weeks. In other words, I'm looking for a mild run-up ahead of earnings, something that happens frequently with AOL. After earnings--well, that's a different problem.
Best
--Steve
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