any significant miss by [Cisco or AOL] could signal more market drops
EARNINGS UPDATE: AOL BULLS READY TO PARTY
[ URL: redherring.com ]
By Peter D. Henig
Red Herring Online
August 3, 1998
Is America Online (AOL) in a class by itself? Its
investors think so, as the online service prepares to
unleash what many expect will be a darn good (if not
downright great) quarter.
AOL is due to report earnings on Tuesday, with the
Street looking for profits of $0.19, according to First
Call, versus year-ago earnings of $0.05. Whisper
numbers are closer to $0.21, with some rose-colored
bulls on Yahoo chat boards predicting $0.24.
Tonga line
"I'm expecting $0.22," said a supremely confident
Keith Benjamin, Internet analyst with BancAmerica
Robertson Stephens. "The tone will be upbeat and my
inclination to raise earnings estimates will be
noticeable."
Does Mr. Benjamin have an insider's crystal ball, or
does he know more than the average bear?
"AOL is way past the traffic stage," said the analyst,
completely rejecting the notion that recent declines in
traffic numbers for the likes of Infoseek (SEEK) and
CNet (CNWK) could have an impact on AOL's results.
"Comparing AOL to Infoseek? That's laughable," said
Mr. Benjamin. "Maybe new account growth might be
an additional factor, but AOL is getting too big for
that."
Mr. Benjamin's unflappable attitude could be linked to
the launch of Internetstocks.com, Robbie Stephens'
newest initiative into providing investment banking
level research and analysis on the Web.
Although rumors had it that Mr. Benjamin would be
wearing a grass skirt at the launch party in the
Fairmont Hotel's ritzy Tonga Room, the analyst flatly
rejected such charges. "That is categorically untrue,"
he countered. "I will be paddling out in a boat, and
that's it."
Network effects
Cisco Systems (CSCO) also steps up to the earnings
plate on Tuesday, and investors are equally bullish on
the networker.
Shares in Cisco have been bid up sharply over the
past couple of months as shareholders expect strong
earnings growth out of this stockmarket superstar.
Cisco settle up another $0.75 on Monday to $96.50,
despite continued market weakness, now entering its
third straight week of downside moves.
According to First Call, the Street is looking for $0.47
in per-share earnings, versus year-ago profits of
$0.37. However, such optimism comes at a cost, as
analysts predict that anything shy of $0.49 will likely
be considered disappointing.
With the broader markets nervous, listless, and
leaderless, any significant miss by either Cisco or
AOL, both bellwethers in their sectors, could signal
more market drops.
But for now, it's still a party in the Tonga Room.
Tuesday, August 4
America Online
This quarter (projected): $0.19
Last quarter (reported): $0.16
Same quarter year-ago: $0.05
Analyst recommendations
Strong Buy: 17
Buy: 6
Hold: 1
Cisco Systems
This quarter (projected): $0.47
Last quarter (reported): $0.45
Same quarter year-ago: $0.37
Analyst recommendations
Strong Buy: 18
Buy: 14
Hold: 3
AOL recently passed 12 million subscribers and swung four new
partners onstage. |
