TA,
Let me clarify my current long-term view of AOL. AOL's biggest problem long-term is bandwidth. They are scrambling to find a solution to that problem, XDSL, cable, something. AOL has two to three years to solve this problem (the amount of time I'm guessing it takes to wire the world with @HOME style cable access).
That said, AOL at long last has a cash flow, about $.53/shr. That cash flow, the core of valuation, can be ramped up relatively rapidly going forward, giving the company substantial resources to cope with changes in cyberspace over time. In addition, AOL lost very few customers after its recent price increase (fewer than I expected), indicating that so far there is little elasticity in its pricing and in theory it could raise rates again.
So, by long-term, I mean the next few years (not ten years).
So much for the company.
The stock price is a different matter, arguably a long way ahead of fundamentals.
In reference to my comments on momentum investors setting up to lose money, you ask, Did you ever think about emailing it to Fidelity Magellan, Janus 20 and S&P Power picks ( top winningiest funds ) managers, since they ‘ve all been buying AOL? If Fidelity Megellan, Janus 20 or any other funds are playing the momentum game--buying a stock simply because it's moving without investigating the issue, I would of course give them the same cautionary advice but I suspect funds have a bit more perspective than the "smart guys" investing on momentum only, TA.
Best,
--Steve
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