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Technology Stocks : America On-Line: will it survive ...?
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To: Joe Gleason who wrote (170)9/25/1996 1:20:00 PM
From: steve lipson   of 13594
 
Joe, one of the things I like about AOL is that it is so hard to like this stock. I listed several concerns. Yours are valid as well. But my basic contrarian nature tells me that an awful lot of people sold the stock for those reasons as it deflated into the 20s and 30s.

I'm looking for that point where people keep beating up on the stock out of habit, rather than because any new problems have emerged. One classic sign of this is when something gets interpreted as bad news when it's really just old news or someone else's problem. I think people misread the Odyssey survey in that way, because you could just as easily conclude that AOL is building an impressive market share in an otherwise highly fragmented business.

Also related to their volume of business and my general contrarian perceptions -- the headlines all focused on their recent 19-hour service outage, but in my own use I am a lot less aggravated now than I was a year and two years ago by maintenance outages, busy access numbers and slow response times when traffic is heavy. Their problems handling growth may be nothing more than old news. If that's so, the unappreciated fact would be that they are farther along the learning curve than anyone else when it comes to handling online service traffic.

Since we can't know what will happen in the future, the next best thing as investors is to spot things that have already happened, but which are being ignored or misinterpreted. That matters a lot more than whether the list of pros is longer than the list of cons or vice versa.
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