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

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

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To: Kerry Phineas who wrote (4795)	9/14/1997 1:31:00 AM
From: Harry Larson	of 13594

You're right! It is $32. Sorry. However, it is unrealistic to eliminate all marketing, which also was originally used. AOL has said it intends to pursue CSi as a separate brand, and it probably would spend mucho in retention marketing to keep the subs. So, adding back CSi marketing (Q4 CSi portion of total CSRV marketing = $44m annualized): $32 Times 2.6m CSi subs = $83m gross Assume 50% margin = $42 m pre-tax Csi Q4 losses annualized =($56)m Loss of ANS Pre-Tax =($10)m =($24)m Of course, AOL might cut back but not eliminate marketing -- especially aimed at retaining subs. So maybe the net above is something better than ($24m). The point is, making up the losses is by no means a slam dunk, not to mention gaining profit via the CSi subs. And the above calcs make no allowance for there being less than the current 2.6m *** AND SEE TODD D'S #4788 pointing out that you have to discount the 900,000 AOL+CSi European subs because it could be years before Europe ad/commerce makes meaningful contribution to AOL's total bottom line.

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