America On-Line (AOL) Message Board

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Technology Stocks : America On-Line (AOL)

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To: RocketMan who wrote (36759)	1/10/2000 9:04:00 AM
From: David E. Taylor	Read Replies (1) of 41369

The chatter on CNBC this morning was that this deal was in the works as early as late November/early December but that AOL's high stock price (then 85 -95 top) was the stumbling block, presumably because at the higher AOL price, the deal would have been more weighted in AOL's favor, i.e. TWX shareholders would have gotten less shares in the combined company and TWX shareholders less. So, now AOL gets to become the media giant it wanted to be. But what's the valuation of the combined entity? Will it trade as a media company with a healthy but much lower P/E, as an internet company with a huge P/E, or somewhere in between? My own take is that we can forget AOL at 140-150 by year end, and that the valuation of the combined companies will be somewhat higher than TWX's historical P/E valuation, but quite a bit less than the prior expectations for AOL. So I'd be surprised if we get back to 95 on AOL any time soon. Guess I'll wait to see how the dust settles before I decide on whether to reduce my currently high weighting in AOL. David T.

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