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Technology Stocks : athm - at home corporation
ATHM 24.25+1.6%Dec 12 9:30 AM EST
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To: Ibexx who wrote (47)7/13/1997 6:31:00 AM
From: Gary105   of 94
 
Valuation estimate: a possible triple over 4 years if they are successful. Based on the following:

1. Obtain significant portion, say half, of 7 million home penetration analysts estimate by year 2001 - say 3 - 4 million subscribers.

2. Subscription revenues are about the same as other ISPs. AOL gets average of $17/month. ATHM gets 35% of monthly subscriptions (rest goes to cable partner). Monthly subscriptions range from $35 - $55. So athm will receive a little less than aol per subscriber.

3. athm will have similar costs to other isps for maintaining servers, networks etc, perhaps lower marketing costs because of its superior technology.

4. aol right now has 7 million subscribers and close to 100M shares outstanding and sells for $71/share.

5. So, lets say 4 years from now athm has half the subcribers of aol - it should sell for about $35/share 4 years from now. At most $70/share 4 years from now. My guess is 2 - 4x its current price if they are successful. The risk is that they are too slow and others beat them.

6. Bottom line - dont chase the stock; excellent reward/risk in the low teens, a reasonable investment in mid teens, a very speculative investment in the 20's.

I welcome and encourage comments about valuation.

Gary
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