After reading this board late last night at 1am, I must say I was pretty worried about prospects for the stock on Friday, not having read the press release. But I think most people are going to see this differently from members of this board. The increase in "other revenues" (advertising and online transactions] looked pretty positive.
I see a lot of merit to the cashflow analysis on this board. If this were not a "glamour stock" I would not keep it in my portfolio. But my thesis for this one is that it has enough charisma to attract a lot of money in a secondary without tanking the price, provided that there is a "story." The key part of the story is "other revenue."
Philosophically, I never trade short because it's gambling against the long term odds, the upside is limited, and the tax treatment is lousy. But if I were going to be short, it wouldn't be in a stock with a huge short position that has to be covered at some point while Wall Street tries to position for a secondary.
How many on this board really have meaningful (eg more than 50k at risk) positions shorting this stock? Or is it mostly just electronic opinion? I find it hard to think people with real money at stake would be employing the fearless trading strategy which seems to be prevalent here to the exclusion of any positive sentiment whatsoever.
So that you know where I am, I still keep a small (1,000 share) long position, having sold most to take a tax deferred gain in my pension plan, because there is no guaranty that the secondary will be successful. You can tell by this small investment that I am not wildly enthusiastic about this stock now that it is out of the mid 20's, but I think the bearish case is way overstated here. In fact, I think I pulled the trigger too soon with my pension account.
LordDarley
Here are excerpts from the press release:
"DULLES, VA, February 6, 1997 -- America Online, Inc. today reported that its revenues increased 64 percent to $409.4 million for the three months ended December 31, 1996, up from $249.1 million for the second quarter of fiscal 1996, with record growth in its subscriber base fueled by its new flat-rate pricing plans, as well as substantially increased revenues from advertising and electronic commerce.
The Company's Other Revenues rose to a record $58.2 million during the latest quarter, roughly 50% greater than in the September 1996 quarter. Of these, advertising and electronic commerce revenues grew even faster, to $40 million from about $24 million in the previous quarter and just $13 million in fiscal 1996's comparable period.
SUPPLEMENTAL MODEM CAPACITY
AOL also announced today that it has obtained commitments for approximately 50,000 additional modems from outside suppliers, which will enable it to accelerate its prime time capacity expansion to help meet the unprecedented demand for its online services. The supplemental leased capacity, in addition to the Company's ongoing $350 million system expansion program, should result in AOL's having a total of more than 150,000 new modems available to serve its members by the end of April -- a full two months ahead of the previously announced schedule. This supplemental capacity will begin to be deployed by the end of this month....
AOL said the increased capacity should accelerate the Company's ability to improve connectivity for its members. The Company expects that the capacity will translate into an ability to handle more than 16 million member sessions a day by April, a 6 million increase over the average January level, for a member base AOL plans to hold at its current 8 million range....
During the latest quarter, Web hits climbed from 100 million to 175 million daily -- representing 14% of use compared to 86% for AOL's unique content -- and E-mail volume increased from 4.5 million to 7.5 million pieces daily....
The Company gained 33 new advertisers during the quarter -- including Toys R Us, Glaxo, Hitachi and Turner Cartoon Network -- bringing the total to over 90 national advertisers, among them many of America's best-known brand names such as American Express, Reebok, Sony, Starbucks, Citibank and Federal Express....
The newly redesigned AOL Marketplace with more than three dozen stores -- including Tower Records, Omaha Steaks, Eddie Bauer, Sharper Image and J.C. Penney, logged 2.1 million member hours in December, up from 600,000 in November. Revenues from transactions alone increased more than 60% over the September quarter.....
By mid-January, total international membership exceeded 500,000....
Ten new banking partners -- including Signet Bank and Chase Manhattan -- joined the AOL Banking Center, making it what the Company believes is the nation's largest online banking service with a total of 29 financial institutions represented...." |
