To All: I was just catching up on my SI reading, so I'll give a smattering of things.
The $24 million charge for the last quarter is supposed to account for all refunds resulting from AOL bottlenecks. Stevie has learned from the past that the Street likes to reward AOL for putting things behind it, especially with one-time charges. However, I am actually surprised that the stock got hit as badly as it did on Friday. Could AOL have lost the magic to stupify investors? Has the stock that refuses to die run out of lives? Tune in to the NYSE next week.
Cohen of Smith-Barney has been told by AOL that they will not be needing financing in the near future. This can be nothing, but a bald-faced lie. I think it is because Cohen has always been the lone analyst who, when it comes to AOL, was able to see the forest fire for (through) the trees. As a result, AOL doesn't intend to make Smith-Barney part of the next underwriting synidicate and feels no compulsion to tell Cohen the truth. Apparently, Morgan Stanley was willing to downgrade because they feel comfortable enough about their place in the syndicate.
AOL reminds me of a Ponzi scheme. The more membership they acquire by hook or crook, the more money that they have to spend on advertising to overcome the churn and show further membership increases. The day that their membership total shrinks w/o a valid explanation, the stock will die as the big growth story will be over. I think that in the near term, Stevie will try to explain any perceived shrinkage as the "fault" of the states' Attorneys General, who "forced" him to stop adding members. In the meantime, we all know that Stevie is still mailing those disks offering 50 free hours. As they say, the more things change, the more they stay the same.
I think one the reasons that we see all of this deceit is that Wall Street has become so in love with stock and option-based compensation. As a result, execs are paying too much attention to their share prices. Mind you, once the bull is dead, I'll bet you that execs start demanding more cash compensation. They like having it both ways. |
