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Technology Stocks : America On-Line: will it survive ...?
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To: H James Morris who wrote (9952)5/8/1998 4:48:00 PM
From: RagnBull  Read Replies (2) of 13594
 
Thought you'd be interested in reading the following analyst's views:

"Gami of William Blair said AOL scaled back on marketing spending not only because it already has established its consumer brand name, but comment because it is slowing new subscriber growth a bit so member usage won't overwhelm its network - a well-publicized problem that has plagued AOL in the past."

Now that Case/Pitman/Leader have realized the importance of maintaining a high level of service, AOL is slowing new subscriber growth. It is clear that AOL has learned its lesson well and that the slowdown in growth will be very good for the company.

We are very lucky to be investors in a great company where the management understands that the sacrifice of growth is a small price to pay for providing a high level of service. So, we can expect better service and slower growth.

Wall Street will certainly understand the wisdom of AOL slowing its growth and will reward management and stockholders by driving the price up even faster.

Q4 results and AOL's commentary will, I'm sure, be very entertaining as the spinmeisters sell Wall Street on the great benefits of slowing growth.

Case, Pittman and Leader must roll on the floor with laughter when they read how the analysts buy their explanations. The notion of AOL deliberately slowing growth is, to say the least, amusing. WorldCom has sufficient resources to handle all the traffic that AOL can generate and AOL knows how to install modems which are freely available. AOL's lack of concern for customer service is legendary and a few calls to their service group indicates that nothing has improved.

I fear that the slowdown in membership which I pointed out a few days ago may last longer and be worse than expected. If we see AOL launch expensive ad campaigns we'll know that the decline in membership growth rate is a serious problem.
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