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Strategies & Market Trends : Roger's 1998 Short Picks
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To: Dan Ross who wrote (2537)2/9/1998 3:47:00 PM
From: Pancho Villa  Read Replies (1) of 18691
 
On AOL: my recollection from their last 10Q is that user revenue alone does not cut it at $19.95, even if they get every single house hold in the US! and as you said not even at $ 21.95 The reason is that the variable margin per customer (revenue - cost of providing the service to that customer) is Bery Bery Bery low so economies of scale do not exist (i.e., no significant service related fixed cost that can diluted). This is why they had all the BS about the need for generating alternate sources of revenue. My bet was that these will not materialize at the rate they predict or would not be maintained. I shorted based on this [intelligent?] bet. The bet is still out all the up price movement has occurred on hype, not hard numbers.

IMO the web is just not a medium worth lot's of advertising $$$$ due to its active nature [unlike TV which is passive so you watch the adds]. In the web, people are busy doing their own thing and do not even notice most of the adds. I say this from my experience but my guess is that it is the same for everyone. Ask you kids/wife/girlfriend/granny/mother in law, etc. do they care much about the adds/click on them?

Pancho

As for AMAT I was long a long time ago got in when it was beaten down to the 20's (before the split) and sold too soon at around $38. May be a good gamble. I think I heard the CEO? will be on CNBC tomorrow. Is this an indication the numbers may be good?

Pancho
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