RE>everybody expects a loss, but how much? < $.60 a share BUT $75 M
in expenses will not be figured into that loss but pushed forward along with heaven knows how much else they are also sweeping under the rug.
Like because AOL is stone walling about refunds, many people are just getting the bills taken off their credit cards, that amounts to a BIG charge back to AOL, and they are not talking about it. ( I don't know the charge back rate but AOL is paying it and in a catch 22 position, they could try to take a person to court to make them pay, but that would open the wound even more, what I hear is that they are just doing a sort of stone wall routine, and hoping they can bully the customer enough that they won't cancel the payment, working on the premise that most people won't, or don't know they can have it taken off, hammmmm..( but is that premise valid or not..? I don't expect AOL to make any statement in that respect, nor will you get a count from the credit card companies, as they do not want to
encourage it..so there is a lot going on that damage control is
not going to talk about and all we can do is guess at it. )
--------------
Forget The cash model for future profit projections, it's not close
to reality, I'm working up a model based on what it really cost to,
to give a person unlimited usage , ( as promised ) and I'm telling
you without having finished it..if they are to give anything like
decent service ( 1 modem for 7 sign ups ) MAX 1M to 10Persons,
AOL can not make a profit at that rate ! Period NEVER , IT JUST
cost to much, particularly the way they have to do it.
I'm still working at getting the data ready..but I'v seen enough
to know that any profits based on $20 per person per month, is
a pipe dream, there is no margin in it, The Only Companies that
may be able to do it that cheap and not go broke, would be the telephone companies..as they could run it at just about cost...as a perk to get your LD business..Some local ISP can eek out a living,
if they run it as a mom/pop business and keep all expenses the
bare basics, but they better like the work, as they won't get
rich at it. So AOL may not look like she is in trouble, but she done
scraped an iceberg, damage control may give her some time,
but I bet with the bilge pumps running overtime, ( and they are)
she will still fold..within a year..and have to get protection from creditors. Profits..that's a pipe dream, please lets
don't panic anyone..I'v been trying to buy some long term puts, but
I notice they have been going up in price, even when she was on the rise the long term puts were going up, I was hoping like Monday or
Tuesday they would come down, as she seemed to have legs,
the puts should have gotten cheaper, but no they bucked
the stock price..why this ?( are insiders getting their life
jackets ready ? )
BTW I'm doing personal interviews with local ISPs, I'm looking at
the load rate on servers, the cost of incoming lines is the bigest
cost, the modems and servers are nothing to that cost, to
add incoming dial in lines is the real rub..it's not as simple as
most people think..when the first lines went down, they counted on such and such growth, and they can not just wave a wand and get more out of the trunk, and they must keep by law lines available for
for residentual customers, there are just so many comercial lines
that can come off the trunk..and just to reserve these you gota
pay..the bigest expence is not the routers or servers or T1
or T3 or backbone..it's the local incoming phone lines, they go at
comercial rates ( about $36 mo ea, and you pay for what you have
reserved, but as long as you don't activate them you don't have
to pay the tax ) AOL has not said a thing about that rub, and
don't think they can just demand dial-in lines, there is waiting
list ! To give you any Idea this is more than I intended to type
on SI..botton line is just dial-in , and backbone rent will cost
an ISP $10 a mounth per user, ( if the service is to be any good
at all) and that's just for starters. Employees, rent , equipment,
insurnce, and all else that goes with running a bussiness will take
real big bite out of the $10 thats left, the profit margin is
just not so great..any little slip up and your going backwards,
so much for the ISP bussiness, I'v seen enough that I don't want
to try it. <G>
If I get into any more detail than this I won't put it on SI
but will route you to a spot I have reserved on my home page,
as soon as I get it together enough, more than you'l likely want
to read,..for the time being, visit
boardwatch.com
be sure to look at the Sprint button while there, look at them all
and when some one tells you AOL is the biggest ISP provider you can
laugh, Sprint furnishes more connectionsd to the internert than
anyone and by a large margin!
Here is who AOL uses as a backbone,
boardwatch.com
but keep in mind the incoming dial-in lines are the biggest nut,
and the big rub, not the backbone.
AOLs plans are only about half of what is
needed..and IF she can get the in-coming lines..it wont be over
night for sure..not in the next 3 months either..in fact she can't get
what she needs in the next 6 months..it's not there to get.
The little ISP has an advntage in that he can locate were incoming
lines are some what more available..and maybe get a 100 or so,
but in the bigger cities where AOL is genrally located, there is a fight for commercial lines, thats a whole story in itself.
In the long run who is going to make the most cash off this internet,
"The BABY Bells " but that seems to be something no one is
talking about, they get you both ways..your phone line..then for
every 7 to 10 users they get to rent out a comercial line to
some ISP..that's one reason they have not kicked to hard about
an extra charge for modem use..they get it anyway via the backdoor.
JIM
|
