Another fine piece from Barron's about AOL:
Don't Write Off America Online
New lower prices make its rich investment resources a better way
Reviewed by Kathy Yakal, Edited by Howard R. Gold
For the past year or so, critics have warned that the rise
of the Internet would pose serious problems for commercial
online services. Executives of America Online, the most
popular of those services, repeatedly dismissed those
concerns.
Until Oct. 29, that is. That's when AOL announced it had
gutted its fee structure, moving to the once-verboten flat
$19.95 per month for unlimited access to both its services
and the Internet. And, as of Dec. 1, users already connected
to the 'Net through another provider will be able to get as
much AOL as they want for $9.95 per month; subscribers who
use AOL infrequently also will get price breaks. The new
flat fees were essentially a repudiation of AOL's previous
business strategy, which held that people would pay extra
for features they couldn't get anywhere else.
That same day, CEO Steve Case announced a companywide
reorganization into three operating divisions, one of which
will be headed by Robert W. Pittman, MTV's former chief. In
another about-face, AOL took a one-time $385 million charge
to cover marketing expenses it had treated as assets on its
balance sheet rather than deducting them as they were
incurred. With that writeoff, AOL essentially wiped out all
the profits it had reported over the past two years. (AOL
will take an additional $75 million charge for shuttering
its own Internet service, laying off 300 people.)
It therefore seems like a good time to visit the ``new AOL''
to gauge its value for investors, just as Barron's did with
CompuServe when that online service reported net losses and
a big jump in subscriber attrition last summer (The
Electronic Investor, Sept. 9). AOL's moves raise questions
for users, shareholders and competitors, but the company
didn't make Case or other officials available for
interviews, despite several requests. The basic issue: Even
if, as Case and Pittman hope, we need our AOL in the 1990s
as much as we wanted our MTV in the 1980s, can AOL afford
us?
For now, apparently, it can. And the combination of
unlimited AOL and Internet access is a compelling package
for the individual investor looking for information and
guidance. AOL already has been blending its own proprietary
content with related material available on the Internet,
providing seamless links to World Wide Web sites. Those who
want the organization and sense of community that AOL
provides can use it as a launching pad. If you already have
bookmarked your favorite sites on the Web, you might still
consider AOL's new deal to see if the investor and other
services it offers are worth your time.
First, check AOL's message boards. Unlike CompuServe, which
routes most of its investment-related traffic into one giant
message forum, the Investors Forum, you'll find
topic-specific message boards sprinkled all through AOL's
investment-related areas, many of which can be accessed
through the Investors' Network (Keyword: Investors). (That
way, as with CompuServe, you can avoid some of the noise and
clutter associated with Internet-based newsgroups.)
And if you'd rather converse with other people in real time,
you'll find chat rooms galore on AOL - on almost any topic
imaginable. You can wander into some of them almost any
time, like Day Trader's Chat. Other rooms are open at
scheduled times, usually in the evening, for special
conference events, which sometimes feature well-known |
