America On-Line: will it survive ...? Message Board

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Technology Stocks : America On-Line: will it survive ...?

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To: Zoltan! who wrote (1879)	2/25/1997 12:31:00 AM
From: LordDarley	of 13594

I sold most of my AOL at a quick profit but still hang on to 1,000 shares out of macabre interest. This latest lawsuit "news" is not that surprising to anyone who follows the stock. I think most of you seem to be surprised about the fact there was insider sellling, not the fraud allegation. That just means you are not doing your homework. The fact that Case et al had sold lots of shares last year is public knowledge. Insider sales have to be reported to the SEC and I don't believe there is any allegation that the sales weren't reported. Executives sell option stock all the time through cashless exercise. It is a substitute for cash compensation in companies like this. It does not reflect a lack of confidence, merely a chance to cash in when cash salaries are not that large and manaegements want fancy houses and trust funds for their kids. Believe me, they will have no problem in getting their equity positions reloaded by a compliant compensation committee, so it is not as if they are abandoning hope for equity growth through AOL. In fact, the sales will make it easier for a compensation consultant to opine in the future that they should get additional option awards so that they retain a requisite percentage of ownership and remain "alligned" with shareholder interest. I'm in the business and see this nonsense foisted on companies all the time; it's not unusual. The allegation of "insider knowledge" about changes in accounting practices and whether they affect the stock price is too complicated to analyze based on newpaper reports. But even if they benefited from insider knowledge, so what? It just means that AOL will get some money. Hard to see the negative in that or that the stock will plummet as a result. Perception of management won't change either. At this point, everyone already has his or her opinion as to whether Case is a shrew crook, a malevolent crook, or just a benign crook with a flair for marketing. The lawsuit is not real "news" to anyone who is accustomed to this sort of behavior with public company managements. I'm more persuaded by the technical reasons I read on this board than by the lawsuit stuff, which I still consider to be flea bites for this company. (Duncan, I know you disagree and attribute more importance to the lawsuits.) It's scarier to me that lots of new internet applications may get developed which AOL members won't be able to access because of primitive AOL technology. I had never thought of AOL as similar to a Commodore computer, but I think it may be an appropriate analogy. The open standards of the internet are a runaway train and it is frightening that AOL is developing a network which won't be able to use its capacities. That's probably the best long term reason to sell. LordDarley

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