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Technology Stocks : America On-Line: will it survive ...?
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To: Jingsheng Sun who wrote (34)8/17/1996 7:48:00 AM
From: Richard Query   of 13594
 
Jingsheng ...... some numbers to think about
These are from the 1st qtr report as I don't have the 2nd to work from

Online rev. $285.5mil
marketing $56.8mil
other rev. $26.9
pertax inc. $25.2
shares 111.2

6.2 mil customers * 9.95 month * 3 months = $185mil
or 100.5mil from addition online charges.
assuming 25% of which is low hour users,addvertising,etc ( Note I beleave
addvertising etc would be other rev.)
100.5mil *.75 / 3 months / $2.95 hour = 8.5mil billable power user hours
prior to new pricing.
using AOL's figure of 5% power user 6.2mil * .05 = 310k
8.5mil hours / 310k users = 27.4 ave billable hours
lost rev to AOL for new pricing (19.95 for 20 hours) $34.25 per user

Now the scry part
34.25 * 310k * 3 months = 31.9 mil
5% power users getting multipule accounts ( not hard to do ) adds
another 773k to lost rev. (310k * .05 * (12.4 hours * 2.95 -19.95 ) * 3)
Total reduction to online rev. 32.7mil per qtr.
25.1mil - 32.7mil = -7.6mil or a loss of .07 per share
Granted the number of subscriber is growing but the percentages should
stay about the same. Also the cost of getting new members is rising
fast. I beleave AOL added something in the area of 1/2 mil new
customers in the 1st qtr. if that is correct it cost them $113.60 per
in marketing (56.8 mil / .5 mil)

Yes I am short on AMER and the above figures have a great deal to
do with why I am.
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