America On-Line: will it survive ...? Message Board

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Technology Stocks : America On-Line: will it survive ...?

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To: Jason Cogan who wrote (11900)	11/19/1998 2:02:00 AM
From: HG	of 13594

Jason.. Very compelling argument indeed. Of course option count and share dilution matters. In my opinion you are confusing price with value. My argument isn't even original but I'll try to share the thought process to the best of my ability. Price of a share matters - it changes with fundamentals. Value of a share does not depend or change with fundamentals. It is what the investor thinks it is. The traditional tools of valuation have failed to factor this bit and this leads to the confusion re: YHOOs current value. Anybody with a marketing background would know that positioning strategy necessitates that the price of a commodity be fixed in such a way which would indicate its relative position. Do you sincerely believe that a Adidas jacket is better in quality than a Lowes jacket ? (Presuming you have Lowes in US...its Aussie version of Payless) ? Or that an Armani jacket is better than any decent non branded jacket ? Most substitute products in grocery stores are produced by the same companies which produce the branded products. If the valuation logic prevails, no one would pay $100 for a Chanel perfume - people would buy Pink Lace by Yardley, or even choose a unnamed substitute from a $10 shop. Yet, the positioning - ie the price - determines the value. People right now are not paying for YHOOs price. They are paying for the perceived value of YHOO which is different for different people. I see YHOO as the MSFT of tomorrows internet enabled world. To me the potential is enormous. You see it for what it is today - an overpriced stock. Thus the conflict in perception. I'm trying to guess the tomorrow and beat everyone to it...you are trying to price it correctly as per todays standards. This is the difference between the visions of a business development manager and an operations manager. I qualify my perception on a lot of Ifs (if internet takes off, if YHOO is not bought over, if it retains its strategic leadership..etc). You are questioning my assumptions - no - disregarding my assumptions by bringing low barriers etc into play. But really..in the end both of us have perceptions.....and we value YHOO based on those perceptions. On a lighter note, someone posted a question. Although a bit rustic, it illustrates a point. What is the value of sex ? To Pamela Anderson - sex means millions. To a roadside whore - it means a few hundred dollars. To an average person - it is free. Need I say more...? PS : A better place to view a discussion of this nature is YHOO BB.

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