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: Brian K Crawford who wrote (1947)	2/27/1997 9:34:00 AM
From: Brian K Crawford	of 13594

John Howell: <<Tel-Sav is in a low-margin, low-tech (time reselling) business.>> Brian Crawford: <<John, Tel-Save net margins before income taxes were approximately 15% of revenues in calendar 1995 and 1996. I would not consider that to be low margin.>> Update: I looked at the detailed Income statement for Tel-save for qtr ended 9/30/96. A significant amount of interest income was included in the operating income figures. They did a public offering and were sitting on cash balances of $150 million. Relevant figures for qtr end 9/30/96 are: Gross profit - 14% Operating Income (Before interest, "other items" and income taxes) - 9.77% The AOL/TALK deal calls for a split of profits generated by AOL members. I assume the split would be at the operating income level. The exact percentage to AOL has not been disclosed. Motley Fool write-up speculates 50%. AOL will wind up with approximately 20% ownership of Tel-Save if they can send 3.5 million users over to Tel-Save at any point during the agreement. Brian

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