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Technology Stocks : America On-Line: will it survive ...?
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To: Tim Kenney who wrote (6513)12/19/1997 1:34:00 PM
From: steve lipson  Read Replies (3) of 13594
 
>>how have AOL's odds changed since the beginning of the year? Your mistake is too judge the odds from the stock price.<<

Sorry I was having so much fun yesterday that I didn't have time to answer your substantive post. Here goes:

The knocks on AOL today are little changed from the ones first expressed on this thread when it started 1 « years ago, back when AOL had 5-6 million subscribers (all using free time and all about to leave), no 8- and 9-figure advertising deals and it only showed a profit by leaving a big chunk of marketing expenses on the books to be subtracted later. If those problems didn't kill it then, I doubt they will do it now that there are 10 mm subscribers, continued solid revenue growth and an actual profit margin you can calculate without an electron microscope.

Did you already forget about the switch to flat-rate pricing and the access fiasco? Are you telling me that the stock was a screaming pound-the-table buy then compared with how much things have deteriorated today?

The company has survived a pretty grueling trial by fire. It is still growing. It is making money. I did not look at the stock price to conclude the odds of success had improved. Rather, I saw the odds improving and watched as the stock moved up in unison. There's nothing perplexing about what happened this year. AOL is not a greater fool stock, a mania or a tulip. It is a classic emerging growth stock that put some of the key pieces in place this year that can produce success down the road. Experienced investors recognized this, and you'll notice that they haven't panicked and raced for the exits despite some good shakes to the overall market.
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