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Technology Stocks : America On-Line (AOL)
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To: robert duke who wrote (5148)2/16/1999 8:34:00 PM
From: Sgt. Stockpile  Read Replies (1) of 41369
 
AOL won't buy @Home - IMO

Why would AT&T go through these amazing growing pains of bidding for AOL, acquiring TCI & @Home, playing a crucial role in securing Excite, only to give it away. AT&T is undergoing a fundamental change from phone company to cable/internet/phone company, and its all because of Michael Armstrong. Turning the AT&T ship is like moving a beheamoth slug -- slow and deliberate. I'm amazed to see how quickly Armstrong has gotten the job done.

AT&T has never been in anything for the quick score -- why would they spend billions in upgrading 2-way cable? These costs are not shouldered by @Home on their balance sheet -- they're made by TCI and AT&T -- so an @Home buyout wouldn't bear these costs. AT&T would essentially build out an entire national infrastructure of 2-way cable only to sell its sole use for that infrastructure to AOL -- for what premium? 2X, 5X, 10X?

I say AT&T waits for 5 years when @Home is a full-fledged AOL rival -- then see who wants to buy who -- just like AOL & Netscape. In 1996 AOL offered to buy NSCP, but NSCP's price was too high. Steve case said, "I'll be back in a few years." And NSCP was practically begging to be saved by then.

At the very least the two will merge and share profits.
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