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Technology Stocks : America On-Line: will it survive ...?
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To: M.J. who wrote (10874)8/3/1998 2:51:00 AM
From: FACTUAL  Read Replies (1) of 13594
 
Its because of their business model. Essentially, increased revenues from derivative sources flow directly to their bottom line while capital costs per subscriber decrease at a certain critical mass which they have reached. At this stage increased subscribers has an exponential effect on earnings by increasing subscriber revenues and profits on a fixed capital base as well as increasing derivative revenue streams which flow directly to the bottom line. The only model more leveraged is Yahoo's which has avoided the issues relating to capital costs. For an incredible example, in Yahoo's last quarter fully 88% of increased revenues flowed into profit.
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