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Technology Stocks : America On-Line: will it survive ...?
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To: Steve Robinett who wrote (11538)10/26/1998 12:39:00 PM
From: Jason Cogan  Read Replies (1) of 13594
 
Steve:

<<AOL is one of the few Internet stocks that's making money right now. But the question, as always, is how much, how fast and for how long.>>

As you are probably well aware, it is even questionable how much money AOL is making right now. On a cash flow basis, AOL is actually losing money. The way they get away with this, among other things, is amortizing software development costs as "investment" rather than expenditures.

But, in a business as challenging and competitive as on-line access, software development costs are really a "recurring" charge. AOL must spend to update their infrastructure and front end every quarter.

Add those numbers to AOL's costs, and you get a much truer picture of AOL's money making ability. Another example of the smoke and mirrors that AOL is masterful at, and Wall Street loves to swallow.

Regards,
Jason Cogan
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