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: cody andre who wrote ()	10/30/1996 8:02:00 AM
From: Zoltan!	of 13594

Looks like AOL may be putting itself up for sale: from WSJ interactive5.wsj.com "The accounting charge is more than five times as large as the total pretax earnings that AOL had reported for the past five fiscal years combined. It underscores just how massive the company's marketing efforts have been-and how illusory its profits may have been. The change raises the question of whether AOL will be able to report much profit at all in future quarters". "The earnings numbers were meaningless -- they were a house of cards," said Neeraj Vohra, an analyst at Wheat First Butcher Singer Inc. Mr. Vohra noted that AOL had reported fiscal 1996 earnings of 47 cents a share before charges, but had run up "deferred subscriber acquisition costs" of $1.37 a share, more than wiping out full-year earnings." "The effort also quickly raised speculation that AOL might be setting itself up for a sale. "A potential acquirer would be a large, conservative company. They wouldn't want to acquire a company that has aggressive accounting but, instead, a company more in line with their own," Mr. Vohra said." The article reports that AOL's head Case denied the latter. Given his track record the canny must believe AOL is in such dire straits that it is indeed for sale. However, would they get anything remotely near current market valuation? Don't think so. Regards BTW, I'd like to know what the Cowen analyst thinks since he has been correct all along while others from Morgan Stanley and Merrill Lynch et al have been planted firmly in the hype section.

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