TO ALL: I thought we could all use some positive "factual news" on
a day like today. If you have done your homework on USR, you know its a winner. If you are a true long term investor have PATIENCE
& CONVICTION. Don't listen to the chicken littles (analysts) of the world, because the sky is not falling. I'm currently searching through the Certified Financial Analyst course manuals for the "CRY WOLF" or
"YELL FIRE IN A CROWDED THEATER" sections :-)
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AOL to upgrade network to meet demand surge
Reuters Story - December 02, 1996 18:41
FINANCIAL BUS ENT US AOL V%REUTER P%RTR
NEW YORK, Dec. 2 (Reuter) - America Online Inc said that it
is embarking on a major program to expand its network and
its plans include spending $250 million through the end of its
fiscal year next June to build capacity and improve service.
AOL said it is upgrading its network to meet the surge in
demand generated by its new pricing and its recent marketing
initiatives. As of Sunday, December 1, AOL began offering a new
flat-rate pricing plan to its seven million subscribers.
AOL said that its system hardware will double over the next
six months, growing big enough to cover the size of nearly two
football fields.
America Online, based in Dulles, Va., said that since July
1, it has added tens of thousands of new network modems to
AOLnet, which it said it the world's largest dial-in network.
This program will accelerate through the spring with tens of
thousands of new modems being installed monthly.
Since September, AOL said it has doubled its electronic
mail capacity and its capability to connect to the Internet's
World Wide Web.
An America Online spokesman said that despite heavy usage
over the U.S. Thanksgiving holiday weekend, there were no
serious problems with its network.
AOL, the world's largest online service, recently sent out
postcards to its members about the new pricing plan of $19.95 a
month for unlimited use of the service.
The postcards also warned members that the company expected
a slowdown in its service during peak hours on Sunday, as users
celebrated the flat-fee by going online for hours. "There were
no serious problems," the spokesman said.
Analysts said with more new users expected, AOL needs to
upgrade its network, especially after its nearly 19-hour outage
on August 7, which happened during regular maintenance caused
by a software glitch and angered many users.
Already this quarter, AOL's subscriber growth is on the
rebound, and in October, the company added 275,000 new members.
In the summer, AOL was hurting from a slowdown in subscriber
growth, with higher than expected churn rates.
Earlier on Monday, Brian Oakes, a Lehman Brothers analyst,
said in a report that he expects the company to announce its
highest subscriber growth rate in its history for November,
with over 300,000 new members joining, he projected.
AOL's stock jumped 4-3/4 to 40-1/8 on the report, which
also contained a buy reiteration by Oakes.
The online service provider did not make any further
mention of the recent investigation into its pricing policy by
the attorneys general of about 18 states.
Last week, the attorney general of Washington signed a
letter of agreement with AOL, resolving allegations that AOL
had violated Washington's Consumer Protection Act by planning
to bill subscribers the new $19.95 rate for unlimited service,
without their positive assent to it.
AOL agreed to notify customers of the upcoming price
changes by using a "pop-up" screen which appears when members
sign on. Customers must choose one pricing plan by March 31. |
