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Technology Stocks : America On-Line: will it survive ...?
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To: Jules B. Garfunkel who wrote (11421)10/11/1998 4:39:00 PM
From: Steve Robinett  Read Replies (3) of 13594
 
Jules,
Let me take your points one by one:
You don't think insiders would be selling if they were negotiating the sale of the company. To my mind, AOL's valuation is so out of line with its fundamentals that a sale of the company might lower, not raise, the share price and motivate insiders to sell. Still, I agree with you. I doubt a sale is in the wind. This rumor has been around a long time.
All the SEC ruling does is bring AOL in line with other corporations. AOL historically has a bad habit of capitalizing short term expenses to enhance earnings
You don't think AOL execs would have sold if they were going to spilt the stock. Check the EDGAR filings. You'll find a proxy cover letter for the upcoming annual meeting that discusses a 2:1 split and the proxy itself with an item authorizing doubling the number of authorized shares.
I would suggest that Case and company are selling for a couple of reasons. First, as long as the finalized earnings were delayed, the quiet period continued and they couldn't sell and this is Case's first big payday. Though insiders aren't selling all their holdings or even a majority of their holdings (Case's 250,000 shares only amount to 5.5% of his holdings in AOL), they aren't blind to AOL's sky-high valuation.
As for AOL's earnings, the stock price is so far ahead of earnings that as long as they have some, Wall Street brokerages houses will keep recommending AOL as a brand name Internet stock.
Best,
--Steve
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