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: Eric Jorgenson who wrote (299)	10/11/1996 4:46:00 PM
From: cody andre	of 13594

Microsoft thinks there is room only for Microsoft The issue boils down to open architecture vs. proprietary similar to IBM-compatibles vs. Apple hardware. We all know who won the match. When AOL adopted MS Explorer 3.0 as its Internet access, it had capitulated to MSFT which now controls its destiny. 1. The decline in AOL will probably continue for sometime due to valuation problems, i.e. the market is still valuing the company at $ 370/ subscriber. Expect contra-rallies above 25 as we go into options expiration period and heavy play around 25 strike price. Also, the 20 and 22 1/2 strikes will influence action in the near future. 2. P/E ratio is around 90 with a projected annual growth rate of 40%. Keep in mind that money managers buy growth stock when the P/E ration is 2/3 of a stock's annual growth rate. 3. In the last 6 months, the number of ISP users has doubled to 3 million and continues to grow at the expense of AOL, Compuserve, etc. The high churn rate will continue as the industry is still in turmoil. 4. This is a momentum stock and momentum plays both on the upside and downside. Hope it helps. // CA

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