America On-Line (AOL) Message Board

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Technology Stocks : America On-Line (AOL)

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To: GalSal who wrote (11523)	4/19/1999 5:26:00 PM
From: Dennis J Baltz	Read Replies (3) of 41369

I just listened to the Jerk on CNBC who wrote the WSJ article. He doesn't know what AOL is worth but it's to high. If he doesn't know what it's worth, How does he know it's to high? I'm lucky enough to have an MBA in Finance from a Northeast University and I know you can't value a stock like AOL the same way you value GM. GM is a manufacturing company for god's sake. AOL is not a manufacturing company. The valuation process is completely different. Also, internet companies are valued based more on potential future earnings. GM is based on how many cars they can build and for how much profit. AOL's revenue jumped by 300% a year for the last few years. Can GM increase their production and profit by 300% a year. I don't think so. For GM to increase their manufacturing capacity by 300% a year for several years would cost billions of dollars. AOL can increase revenue by 300% a year and still make a profit. This professor from the University of Wharton uses historical averages from industries which have no correlation to the internet industry. This is a common error with people who make broad assumptions to come up with a conclusion and are to lazy to do tedious detailed research.

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