Brian < As far as the investment part is concerned(AOL/INTC), there should be no argument over this: AOL is in a commodity business, with no barriers to entry, and is definitely a "low-tech" technology stock. If INTC was to make an investment in AOL, I would question Barrett's vision of the future and possibly sell some shares. >
I share your opinion on this one. Your statement "AOL is in a commodity business, with no barriers to entry", is correct if you view AOL as a web portal only. In the past AOL differentiated itself from others by its ease of use , and gained market share by aggressive and slick sales techniques, and did an outstanding job by appealing to the novice. Since others are catching up on the ease of use, AOL is now trying to further differentiate itself as a content provider.
Time Warner is a "content" company, and so this an excellent synergistic merger. AOL then becomes an outlet for the Time Warner "content".
An Intel/AOL merger has no synergy that I can see. Given the astronomical valuation of AOL, it will be a big drain on Intel, with nothing dramatic to contribute. It will tend to defocus Intel from its core silicon and hardware technology. |
