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Technology Stocks : America On-Line: will it survive ...?
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To: Harry Larson who wrote (9394)4/7/1998 11:28:00 PM
From: The Duke  Read Replies (1) of 13594
 
>>Raising our price target to $85, which is 50 times our C2001 EPS
>>estimate of $1.70.

1) I'm skeptical AOL will earn that much so in three years. So far, the best they have mustered is 8.5 cents in a quarter, and there was wide spread agreement that the quality of those earnings was poor. how is aol going to quintuple their earnings over the next three years? especially if the 8 cents wasnt really operating earnings.

2)Suppose we accept the 1.70 figure. This represents over 340M in earnings. In order to believe this we have to believe that they have a relatively mature earnings stream at that point. Then we are going to pay 50 times earnings? Once the earnings have matured???? No wait, that will be three years from now, so we would like to have some capital appreciation by then. I guess we will be paying 70 times earnings. Is there a bull on this thread who cares about fundamentals who can defend this???? It strikes me as patently absurd.
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