Dan Woodbury....<<The bottom line is I don't know how AOL or any internet company for that matter will be able to use its bottom line to justify valuations in the tens and hundreds of billions.>>
Maybe the following article will help you understand why AOL has the potential to grow several hundred more percent...Notice the part about more growth potential than cable companies due to their international business....Also, note that they are, as the article will tell you, bigger than ALL local ISP's combined..Not stated in this article is the Media Metrix report of having a combined (w/NSCP) 70% reach of all internet users....The internet is just beginning to mushroom and AOL is positioned to be HUGE, if they weren't huge enough already, "HUGER" if you will....
You can remain in your short position if you have one, or just remain on the sidelines and watch...But one thing for sure---YOU WILL MISS OUT ON A SMALL FORTUNE.....And You can, well O.K., I and all AOL shareholders, CAN BANK ON THAT!
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December 24, 1998 11:55 AM PT
AOL PASSES LOCAL ISPs
THE BIGGEST ONLINE SERVICE IS NOW BIGGER THAN ALL LOCAL ISPs COMBINED, A REPORT FINDS.
By Matthew Broersma, ZDNN
America Online Inc. has been the world's largest provider of online services for some time.
But now, according to new figures gathered by ZD Market Intelligence, AOL (NYSE:AOL) serves more home users than all U.S. local Internet service providers combined.
The research service found that in August, AOL had more than 14 million members, compared with about 13 million combined for local ISPs, companies that offer access on a regional basis.
(ZD Market Intelligence is operated by Ziff-Davis Inc., ZDNN's parent company.)
In January, Dulles, Va.-based AOL had more than 8 million members, compared with about 12 million for local ISPs. Local ISPs do not include companies such as AT&T WorldNet or Microsoft Corp.'s Microsoft Network, which offer national service. Both national and local ISPs compete with AOL -- and with each other -- for users.
The figures do not include members of CompuServe, another online service owned by AOL.
AOL's share rises
In the same period AOL's market share for the home rose from 30 percent to more than 42 percent.
"Although this big of a change in only six months is huge, through the trends I've seen since the inception of collecting this data, I'd expect the upcoming data that we'll collect during December/January to show an even larger uptick in the share for AOL," said Aaron Goldberg, ZD Market Intelligence's executive vice president, in a statement.
The research service also reported that AOL had outpaced local ISPs for market share of home office users. AOL had a 32 percent share, compared with 29.9 percent for local ISPs.
The figures underscore AOL's increasing dominance of the business side of the online world, a factor that has had other ISPs nervous for some time.
Opportunity knocks
Despite a recent stock rally following AOL's addition to the S&P 500 index, some analysts feel the service still has plenty of growth opportunities ahead.
"We believe AOL will be able to generate highly profitable incremental advertising and commerce revenues as more individuals spend more time online," wrote analyst Keith Benjamin of BancBoston Robertson Stephens in a report Thursday.
He said AOL has more profitable growth opportunities ahead of it than cable television networks, due to its "rapid subscriber growth rate and relatively open-ended opportunity, both in the U.S. and internationally, both at home and at work" and the continued ability to outsource the "capital-intensive access business."
But Credit Suisse First Boston said analyst Lise Buyer cut the firm's rating on America Online on Thursday due to strong price appreciation in the stock.
Buyer still believes the company's current fundamentals are strong.
AOL closed Thursday at 136 5/8, down 1 3/8.
Reuters contributed to this report.
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