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: Hawk who wrote (7481)	2/10/1998 9:01:00 PM
From: Keith J	Read Replies (3) of 13594

Took a closer look at a few numbers. Pretty easy to present a bearish case. These are Dec. quarter to Sept. quarter comparisons. Usage = Dec. quarter, 41 minutes/day Usage = Sept. quarter, 40 minutes/day Usage = Now, 44+ minutes/day (if you believe the numbers AOL has provided) Net profit = Dec. quarter, $20.8 million Net profit = Sept. quarter, $19.2 million And the Dec. quarter includes a lot more other revenue for Christmas gifts, etc. that must have fed into that profit somewhere (even though the margins may have been smaller). So, where's the profit growth, considering AOL added over 1.2 million members? Sure the $2/month will help some. But I doubt this will be as positive as people might think. You'll have some defections. You'll have some people switch to a yearly plan (either before April 1, or new members after April 1). You'll have some switch to the "bring your own access" plan. A few may drop down to light users. Don't forget, Yahoo Online starts up around the end of March. MCI currently offers $15/month to MCI long distance customers. Prodigy Internet starts teaming with Excite in April. Prodigy offers yearly plans at about $16/month (they did a press release today too). And I don't think either have done much advertising yet, but I'm sure it will be forthcoming, especially with AOL's timing of the price increase. Just some observations. KJ

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