The following is an excerpt from recent 10-Q filing. I don't really see the current stock price has any risk figured in.
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Average monthly subscriber usage in the first quarter of fiscal 1997, the last quarter before the introduction of flat-rate pricing, was approximately 7 hours. In the second quarter of fiscal year 1998, average monthly subscriber usage had increased to approximately 21 hours, and reached 23 hours per month in January 1998. Due to the lack of historical operating experience under a flat-rate pricing structure, the Company is unable to predict whether usage will continue to trend upward, and, if so, at what rate. The Company is also unable to predict the impact on subscriber usage patterns that will occur as a result of the $2.00 per month price increase to its Flat-Rate Plan which will be implemented in the fourth quarter of fiscal 1998. If current usage trends continue, further pressures on operating margins may result. The impact of increased usage on operating margins, if it occurs, could be offset, in whole or in part, by increases in advertising, commerce and other revenues, increased data network operating efficiencies, reductions in marketing and other operating expenses, pricing changes or other factors or actions.
The Company competes in a rapidly changing marketplace with a wide range of other companies in the communications, advertising, entertainment and information, media, direct mail and commerce fields...
Some of the present competitors and potential future competitors of the Company may have greater financial, technical, marketing and/or personnel resources than the Company. The competitive environment could (i) require price reductions and increased spending on marketing, network capacity, content procurement and product development, (ii) limit the Company's opportunities to enter into and/or renew agreements with content providers and distribution partners, (iii) limit its ability to develop new products and services, (iv) limit its ability to continue to grow its subscriber base, (v) result in increased attrition in the Company's subscriber base and (vi) negatively impact the Company's ability to meet its business objective of changing its business model into one in which more revenues and profits are generated from sources other than online service subscription revenues, such as advertising and electronic commerce. Any of the foregoing events could have an impact on revenues or result in an increase in costs as a percentage of revenues, which could have a material adverse effect on the Company's business, financial condition and operating results. |
