Sam:
<<AOL has been around since the mid 80's, before the internet was even discovered.>>
True AOL has been around since the 1980's. Also true that they have yet to earn a penny.
Their business model is inherently flawed. It costs them more to provide and support connection service than they are able to earn from access fees and advertising. Meanwhile, the internet progresses at lightning speed towards an open, non-proprietary network, something which directly attacks what limited value AOL has managed to build. But AOL has succeeded at convincing/bribing Wall Street that these facts don't matter.
Case and Pittman are masters of perception, marketing hype, and the ways of stock price manipulation (ie. accounting gimmicks, switching exchanges, buddying up to Dick Grazzo of the NYSE, circulating irresponsible takeover rumors).
The stock price is built on nothing except hype and misinformation. Most portfolio managers have never used the internet, so to them, AOL represents the information superhighway. Since nobody is really making any money on the net, and everything is based on future earnings, Case and Pittman are free to paint as optimistic a picture that they choose. If this doesn't work, they can always inflate their unaudited subscriber numbers to make their future look brighter still.
A question for you.
What happens, when Wall Street discovers that making money really is important, and AOL doesn't have a good plan for earning anything?
Regards,
JC |
