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Technology Stocks : America On-Line: will it survive ...?
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To: Thomas C. Donald who wrote (3923)7/11/1997 1:13:00 AM
From: steve lipson   of 13594
 
Thomas: Before you bet your life on your forecasting ability, please
do me a favor and make sure to take out a lot of life insurance. <g>

Things that could (and likely will) cause your scenario to blow up:

Suppose AOL today has 8 million or more subscribers.

Suppose that the number who will shift rate plans falls far short of
your 20 percent annual target. After all, they could have shifted as
I did back when the flat rates were introduced. If they haven't already,
it is pretty hard for me to imagine that a full one out of every five is
right on the verge of slapping themselves upside the head and saying,
"I could have had a V-8."

Suppose AOL manages to add a net 700,000 new full-price customers. This
would offset the entire erosion you foresee. And it is far short of the
2 million or more customers they added in each of the last three years.
As a percentage growth rate, it is a modest 10 percent from your 7 million
base, so it is a pretty small fraction of their past growth rates.
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