William: Speaking of AOL, AMZN et al
Barrons humor
In time, we may even see advertising supplements in Worth where lupine
shortsellers model garish $3,000 shoes they purchased by ganging up on
Amazon.com, or where self-promoting newsletter writers get dolled up in
whatever Christian Dior happens to be pushing this fall.
We've long thought that in terms of valuation, online was way off base.
Would any sentient businessman pay $24 billion for America Online, whose
latest 12-month sales weighed in at $2.6 billion? Would any businessman of
sound mind pay nearly $1 billion for MindSpring, with annual revenues of $78
million? But that's what the stock market says they're respectively worth.
This month, as it happens, the two companies did a deal. AOL sold an
internet provider called Sprynet -- lock, stock and eyeballs (read: facilities,
customer support and 180,000 subscribers) -- to MindSpring. We stumbled
upon the transaction via Will Lyons, who puts out a newsletter called Short
On Value. Will, it should be noted, thinks both stocks are overpriced, but his
numbers speak for themselves.
MindSpring will pay between $35 million and $45 million for the 180,000
Sprynet subscribers, depending on how many it retains after the sale. That
works out to between $194 and $250 a subscriber.
By comparison, the stock market is valuing America Online's 14.4 million
subscribers at $1,685 each.
And it's placing a value of $960 million, or $1,675 each, on MindSpring's
573,000 subscribers (assuming all the 180,000 Sprynet folks move over).
Granted, AOL and MindSpring subscribers might rate a premium. But six
times the Sprynet subscribers? Come on.
interactive.wsj.com
lp |
