Apple was finally described today as having become "fundamentally unfixable", as its chairman and CEO resigned. If it can happen to Apple, it can happen to America Online.
In the quarter which ended on 31Mar97, AOL reported:
Subscription revenues: $381,486,000
Other revenues: .............. 74,705,000
Costs and Expenses: ..... 455,626,000
Operating Income: ............... 565,000
Shares Outstanding: ...... 113,789,000
During the past six days the stock price has increased by $15.00 per share on news that AOL will earn approximately $0.10 per share per year for some advertising services (part of which are a continuation of existing obligations).
AOL seems to be staking its future on providing services via its internet site and seems to be being forced away from its previous role as an access provider for its approximately 7,000,000 customers. The recent advertising sales have been for space at its internet site. Unfortunately, AOL has already been forced to reduce its subscription charge to less than $10 per customer per month for access to its internet site -- significantly less than the $18 it is currently receiving as subscription revenues from its average customer.
IF HALF OF AOL's CUSTOMERS CHOSE TO ACCESS AOL's SERVICES ONLY VIA THE INTERNET, REVENUES WOULD BE DECREASED BY AT LEAST $3.00 PER SHARE PER YEAR. COSTS WOULD BE THE SAME. IN FOUR MONTHS, AOL WOULD BE BANKRUPT! |
