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Technology Stocks : AUTOHOME, Inc

ATHM 23.10

-1.5%

Dec 3 3:59 PM EST

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To: Neal davidson who wrote (8695)	4/26/1999 7:44:00 PM
From: E. Davies	Read Replies (2) of 29970

I wish I shared your optimism that AOL wont mess this up by getting involved but I dont. My reply to your reasons: 1) For AOL to get involved would be to acknowledge that their broadband plan is inadequate. AOL getting involved is simply the next step in broadband. They have always intended to get into cable, so far they havent found a good opportunity. This could be that opportunity. (2) Even if they did get involved, it would only give them access to Comcast and Media One homes. That is not the nationwide coverage they seek. ALL broadband deals are this way. Built one region at a time. Very weak argument. (3) The deal would be dilutive, and their shareholders would not take that very well. This is AOL we are talking about here. AOL is not exactly an earnings powerhouse. The stock runs on future possibilites, not earnings. A cable broadband deal would probably be good for the stock. In one sudden swoop ATHM could lose Comcast, the potential to get UMG and the potential to merge with RR and in addition gains a very vigorous competitior. This is serious stuff. Eric I sold my short term shares of XCIT today. Dont like the feel of this. I'll be happy to be wrong.

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