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Technology Stocks : America On-Line: will it survive ...?
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To: Harry Larson who wrote (4529)8/19/1997 8:24:00 PM
From: Andre Lukas   of 13594
 
Harry,

the figure of 1 MM is just a supposition that if AOL had gained that much from the sale of real estate, it would translate to additional .01 for Q4. We know what actually should be reported, but with the creative accounting, AOL reported .09/share. That figure did not specify of an inclusion of a one time gain or a one time loss resulting from the transaction of that bulding. Should that be an oversight (due to mid June closing), AOL would have issued a revised figure and trumpetting that gain. Therefore, I can only surmise that the transaction was a loss, and they might have chosen to omit that for the y/e statement. Considering the relatively cheap price they got for the building (price over annual earings of 5 instead of 9 or 10), and considering further of their accounting method, the assumption that there was a lost is not outrageous.

The earnings announcement was prepared by AOL accountants, and the auditors would issue a report of whether the accounting follows the GAAP. AOL claimed that the internet business is new hence their accounting method is appropriate. The auditors might have bought that story. However, I would not be surprised if guidelines issued for GAAP relating the internet.

Stay tuned, and wait for the 10k.

Andre
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