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: Brent D. Beal who wrote (4915)	9/26/1997 1:15:00 PM
From: Harry Larson	of 13594

>>***and now for something completely different...... Much of AOL's current valuation derives from expectations that the ad deals announced last June (CUC, 1-800-Flowers, amazon, etc) would quickly turn to a flood of similar ones. It's now going on a full quarter with zip except dicey deal with N2K which will have the cash to pay only if it can do its once before cancelled IPO. Even AOL underwriter Alex.Brown so far sees only two multi year deals totaling $15m. (In next two weeks -- 09/23 report. Based upon what input is unknown). How long will investors continue to wait for the `flood' that hasn't so far materialized to the level of expectation that has powered the stock? When will they figure out that the 3-4 year deals, made for prime real-estate when AOL had 8 million subs, limit upside leverage from new subs? Or maybe that AOL did the 3-4 year deals in part because it sees significant slowing of sub growth? (Which AOL and the bullish analysts have been spinning as "controlled growth")

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