AOL ( America Online Inc ) sees Q3 subscribers roughly unchanged
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SAN FRANCISCO, Calif., Feb 26 (Reuter) - America Online Inc Chief Financial Officer Lennert Leader said the company expects to keep its subscriber base essentially unchanged in the current quarter, at more than eight million.
"We're not seeing any extraordinary churn in the business," Leader told reporters after a presentation to investors at the Robertson Stephens technology conference here, referring to levels of subscriber turnover following the company's well-publicized difficulties with network access.
"Naturally, we see somewhat higher churn, but again it was nothing unusual and our expectation is that once the network is built out,
we'll get back to historical or even better" subscriber growth trends, he said.
Earlier, he told investors he thought brand identity and high ratings for AOL's ease of use had caused customers to complain about
access problems after the company went to flat-rate pricing in December.
He said churn rates had actually improved over the last couple of months. More than 500,000 subscribers were added in the
December quarter, he said.
He also said the company would offer more favorable terms to customers inconvenienced by the network access problems than had
been agreed with states' attorneys general earlier this month.
Leader said he expects more consolidation and higher barriers to entry in the online market. "We see smaller players being acquired
by larger players," he said, adding there may also be more niche players.
Leader declined to discuss analysts' estimates for the company, but repeated it plans to spend $350 million to beef up its network
access capabilities.
He estimated the company will have 350,000 modems when the investment is scheduled to be completed at the end of June, up from
50,000 today. Leader also said AOL is leasing up to 50,000 modems meanwhile for short-term relief.
AOL shares were up 1-5/8 at 38-1/4 in afternoon trade on the New York Stock Exchange.
Leader said AOL's deal with Tel-Save Holdings Inc in which AOL got a $100 million initial payment, announced on Tuesday, would
also give AOL up to Tel-Save 17 million warrants and a chance to participate in $240 million equity appreciation in the company if the
stock rose by $20 a share.
AOL will market Tel-Save's low-cost long-distance service to AOL subscribers this fall.
Leader said he expect there to be roughly 50-55 million U.S. households with computers by around the year 2000, with about 35
million using on-line services.
"We see predictable consumer online buying patterns," he said in his presentation. "We are a nation of brand buyers -- we're seeking
convenience. Convenience is king."
((sam.perry @reuters.com, Palo Alto Bureau 415 846 5400)) |
