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Technology Stocks : America On-Line (AOL)
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To: Fred B. who wrote (37009)1/10/2000 10:33:00 PM
From: zello  Read Replies (1) of 41369
 
I have been an AOL shareholder for a couple years and while on the one hand the deal is revolutionary and will change the face of the media and communications industries (the latter will come) by fully integrating the Internet, after reviewing the financials of this deal, I don't see how AOL shareholders like myself can walk away happy. We paid top dollar for a no growth company with $18 billion dollars (that's 18 BILLION) in DEBT. Ted Turner bites and definately got the sweet end of the deal. He and Time Warner shareholders have reason to celebrate. Although AOL will have majority stake it can be easily argued that Time Warner just "acquired" AOL. I sold 66% of my position today and am considering selling the rest. There are plenty of other places to have the money invested which will give more bang for the buck. Just a triple from here which could take quite sometime would give AOL a one trillion dollar market cap. The question is, who will get there first? AOL Time Warner or Microsoft. My guess is that sometime next year AOL Time Warner will be added to the DOW if not the end of this year. The market cap and industry dominance would justify such a move. AOL will definately need to sell portions of Time Warner that will cut into profits/margins. This is where the conflict in combining the strong leadership from both companies may come. We could have an "Other People's Money" on our hands. After listening to the speech of one of the Time Warner guys (I forgot his name) in yesterday's press meeting it almost sounded like the founder of New England's Wire and Cable (from the movie). Forget bringing the Internet to everyone if it is at the expense of profitability. We want high growth, high margins, and high profit...this is not a charity. While everyone else is downsizing and outsourcing we acquire a money eating behemoth. I hope AOL didn't bite off more than they can chew.

Z
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