What I am saying, is that so far AT&T has NOT focused on the Internet. I didn't see one single ad about its $14.95 ISP service in the past year. This compares to AOL's constant "It's so easy to use" propaganda. Maybe Sprint's recent fast network announcement woke up the management at AT&T. (Mentality: "If Sprint is going toward the Internet, we better do it too.") Or maybe the recent run-up of Internet stocks showed AT&T management one sure way to enhance stock value. Even if they only sign up 5-10% of current customers for the Internet, that would be 5 million (I believe). AT&T's stock has been flat for a while, its management must be looking for solutions.
Whatever the reason, it looks like AT&T is now going to get serious about the Internet. The quickest way to gain market share, is of course to buy out AOL. Failing that, I believe its next step would be a complete ad blitz. How do you think AOL will fare when AT&T use the same ad tactic as it did with MCI and Sprint?
"Compare us!"
"Save $150 a year over AOL!"
"All-in-one billing."
"Switch now and receive 2 months free!"
"The same email cost you $x.xx at AOL, we charge you half that."
Also, don't you think the long distance companies worry over Internet phone calls? Sooner or later, they will want to get into that revenue stream to ensure they stay alive in the communication business. Better yet, they will push for video phone to revive the entire telecommunication market. It may not be feasible 5 years ago, but it certainly will be within the next 5 years. (See below)
Microsoft is a software company. Through the failure of MSN, Gates probably realized that he better stay with what he knows. MSFT's recent investments in Internet and networking stocks ensure its software will be used for the Internet. In deed, it announced earlier this week that some set-top devices will be running Windows by 1999.
Back to AT&T (and Sprint), you continue to dismiss xDSL as if the world is going to stay with 33/56K for another 5 years. What were we using 5 years ago? 9.6/14.4K modems. xDSL and cable modems are here NOW with greater profit margin for the computer industry. It will convince the mass that they need it, just like it convinced the mass that 56K modem is twice as fast as 33K. (It's not, one only gets 38-45K.)
For the record, I only become bearish on AOL about a year ago, not 10 as you implied. And if you have been bullish on AOL for 10 years, then perhaps you have fallen in love with the stock and unable to see beyond it. One simple test is, to ask yourself, what mistake can AOL make now that will cause you to become bearish? If you can't come up with the answer, then you better sell your remaining AOL stocks.
Yikes |
