America On-Line: will it survive ...? Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : America On-Line: will it survive ...?

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: steve lipson who wrote (4782)	9/12/1997 2:23:00 PM
From: Harry Larson	of 13594

AOL's investment banker, Robertson Stephens, estimates that ANS non-AOL revenue in FY98 would be $100m with 10% pre-tax margins, or $10m. AOL now gives that up. In the 7/30 quarter, the declining revenue of CSRV's CSi division was $125m and unprofitable to the tune of $14m. Even eliminating marketing expense ($11m ex amortizzation of prior $37m of deferred marketing) would bring that only to negative $3m -- assuming screeching halt of subscriber and revenue decline. AOL's Q4 ad/commerce revenue was $3.47 per month per sub. CSi's $0.80. So, a possible initial incremental bogey is $3.47-0.80 = $2.67; or $10.68 per year per sub Times 2.6m CSi subs = $27.8 million gross Assume 50% margin = $13.9 m pre-tax Now assume that AOL somehow could cut CSi's $12m/yr loss rate by two thirds to $4m. $13.9 m pre-tax-$4m = $10m In other words, the same amount forecast for ANS, but with many more `ifs', including timeline, full retention of the 2.6m CSi subs --many of whom pay premium prices in part to avoid marketing pitches.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next