KOna on catching up of the move I think it was little different this time, we got out of hi fliers maintained a minimum and bought the valuation stocks nearly at the bottom.. now I hope that we take the old high on SPM 1522 area and close above 10500 few times to go through DOW 11800.. I think we will see good companies make an impact within Comp and sotry based spin doctored companies to yield to some good stories in DOW and within Comp, like we had that winners takes it all strategy now it is going to be the 'winners cup finale' on one hand where your IBM MSFT INTC DELL( Cher of Multex calls this one a bust.. too much competition in PC environment) CSCO come in to play not forgetting TXN may be JDSU CMRC ARBA and the earnings machines trading at low multiples, I smell a big take over battle season from new billionaieres, after all the new econopmy billionaires have to park their wealth into something tangibles like AOL taking over twx(merger OF EQUALS is just TOO polite a word for egos of TWX guys I suppose) more of these things will be seen the money burning holes through new economy leaders will give some good returns to valuation stories, just a wild thought..
AOL/..Absolutely Kona it is.. AOL// story that may interest you.. the Eurpoean theater take over is a good long term..
AOL Retakes Europe
Kevin Prigel
Mar 17 2000
We are encouraged by the resolution of the AOL Europe
situation, with America Online [AOL] purchasing
Bertelsmann's 50 percent stake at a valuation of
approximately $8.5bn. We must realize, however, that at
this valuation, AOL's purchase is far from a steal. In
fact, without factoring in marketing benefits and web
properties, AOL was ripped off given current market
conditions, paying $300 more than the value of AOL
domestic subscribers.
After assigning generous values to AOL Europe's web
businesses, and given the marketing aspect of the
contract, America Online paid approximately $1,650 per
European subscriber, compared with a current value per
domestic user of approximately $2,154. This discount is
very minor, especially given the fact that AOL Europe
has grown at a significantly slower rate than US version
of the service.
The hopes in this merger include Time Warner's strong
European foothold, which will allow AOL to aggressively
market to a new base of potential subscribers, and the
movement in Europe towards unlimited access, a key to
making AOL profitable. (AOL depends on marketing and
ad revenues for profitability. Those revenues increase
directly with the amount of time people spend online.)
Given these two potential "upside surprises," it does
appear America Online is getting a good deal in the
long run for AOL Europe. Unfortunately, the market is
not rewarding AOL for the full value of subscribers
currently. The long-term investor however, will realize
that the lifetime value of a subscriber is far in excess of
$2,150, and will continue buying AOL. It's just
unfortunate AOL couldn't squeeze Bertelsmann on
valuation just a little more.
AOL Domestic
Market Capitalization (bn)
$141.50
Market Cap of Dial-Up Service (bn)
$51.90
Subscribers (m)
23.1
Market Cap/Subscriber
$2,154
AOL Europe
Valuation of AOL Europe (bn)
$8.30
Marketing Services Value (bn)
$1.10
Value of Web Properties (bn)
$1.50
Price "Paid" For AOL Europe (bn)
$5.70
Subscribers (m)
3.4
Market Cap/Subscriber (Total price)
$2,441
Market Cap/Subscriber
$1,847
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