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Technology Stocks : America On-Line: will it survive ...?
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To: tom pavlish who wrote (268)10/10/1996 1:20:00 PM
From: steve lipson   of 13594
 
Does anyone remember how CUC Intl. had high deferred membership costs throughout much of the 80s. There was handwringing over this from time to time, much like we see here, but that never stopped the stock from making people a ton of money.

The point IMHO is that deferred expenses aren't ever going to be the key to understanding AOL. If they continue to add subscribers, if the online marketplace looks like it will eventually sort itself out with AOL as one of the market share leaders when the dust settles, if advertising revenue or some other business model helps them grow earnings, if, if, etc. etc. -- then the deferred marketing expenses (or lack of current earnings, for that matter) will turn out to be trivial in figuring the stock's valuation.

If, on the other hand, all those growth scenarios start looking like they aren't going to pan out, well, the deferred expenses will be the least of AOL's problems.
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