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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: TARADO96 who wrote (25867)	7/16/1999 8:16:00 PM
From: bundashus	Respond to of 41369

I was emailed this to about AOL. I did some cut past to the report to leave AOL info only BANCBOSTON ROBERTSON STEPHENS Keith E. Benjamin, CFA - 415-693-3285 mailto:Keith@rsco.com Unsubscribe to: mailto:rsch_webmaster@rsco.com July 16, 1999 The Web Report - Volume 2, Issue #28 This week, the NETDEX index decreased 3.4% from last week to 624.97. For comparison, the NASDAQ ended the week up 2.4% from last week. AOL READY TO REACH NEXT LEVEL? - We have been relatively quiet on AOL, groping for the catalyst to move the company and the stock to the next level. We believe investors may have been lulled into inactivity by the success of the AOL machine, with the laws of large numbers masking the magnitude of the number of people AOL is now reaching. We believe AOL is positioned to take a big jump up across metrics as its service becomes used across multiple locations and new platforms, allowing a significant increase in revenues and earnings over the next few years. Over the next few months, we expect investors to wake up to the power of AOL's position. As such, we believe now is the time to grow more aggressive again on accumulating the stock. This quarter, we expect AOL to add 750,000 U.S. members. In addition, we expect growth from commerce payments to provide for positive top- and bottom-line surprises. We believe AOL will continue to control more shopping than anybody else, because it has more time to incite impulse buying. We are stunned by the current numbers associated with AOL's broader Web-based communications tools. There are more than 40 million registered users of AOL's Buddy Lists and AOL Instant Messenger (AIM) services, who send over 430 million messages per day. ICQ's 38 million registered users send an additional 330 million messages a day. These are more messages in total than the 500 million letters sent each day via the U.S. Post Office. What new applications will drive us to keep on communicating? AOL seems to be a good habit that's getting better. New interactive devices will enable new interactive directory services. AOL can provide status indication and action. Are you there? Are you online or offline? Are you available? What is the math of multi-platform subscriptions? Tiers of membership make sense, packaging each next level for a small enough cost to encourage upgrading. AOL can use its size to offer volume discounts to its members on wireless and other hardware, including PCs. We don't believe even free PCs can help the lagging brands. Microsoft also announced this week plans to offer a free computer to customers who commit to three years of service with MSN. With many family PCs being purchased as second boxes dedicated to Web use, we believe AOL will continue to have a natural advantage. This fall, software client upgrades provide some incremental improvements. AOL version 5.0 features You've Got Pictures right under the You've Got Mail button. It also hosts a calendar. The AOL store has an updated look. AOL 5.0 detects connection speeds and sends a pop-up window for access to broadband content. We view broadband as an add-on. Broadband does not solve the challenge of providing access everywhere. You will still need dial-up access on the road, for work, or for vacation. We don't see any other company close to AOL to provide this capability based on relationship it has with its members, providing their daily link to the Web and each other. We believe investors have been missing the math of AOL's combined reach. We estimate AOL reaches almost 100 million people through its various services, with AOL and CompuServe over 20 million, with AIM over 22 million, with ICQ over 38 million, with Netscape over 15 million users, and with the recently acquired Winamp music client, which has quickly grown past 12 million downloads. Adjusting for duplication, the number might still be greater than 80 million unique users worldwide. We continue to believe AOL holds most of the cards in any negotiation with the pipe providers given its huge database of loyal members. As such, we think cable deals favorable to AOL remain inevitable. OPEN CABLE ACCESS ISSUE GAINING VISIBILITY- Local rumblings continue to sneak up on us. Politicians in Broward County, Florida, decided to let non-cable service providers such as AOL offer broadband Internet access via the local cable system. Officials in Portland have already reached the same conclusion, and the issue has been shelved for a few weeks in San Francisco and Los Angeles. We continue to believe open access issues will flounder at the Federal level, with the FCC trying to avoid Web regulation in general, viewing it as political suicide. We expect AT&T to appeal, and continue to believe small victories for each side will eventually contribute to posturing in negotiations. We believe once the cable rollout is no longer supply-constrained, perhaps in early 2000, cable players will need AOL's member base and multiple service offerings marketing muscle to continue growing quickly. Excite @Home reports Q2 results next Tuesday. We believe there is upside to our modest subscriber growth estimates. The overall cable adoption rate appears swift, with Road Runner this week announcing 28% sequential growth to 320,000 subscribers. With Excite @Home expected to have over 600,000 subscribers as of June, we believe we have crossed the one million cable subscriber milestone. Excite @Home is hosting an analyst day on July 27, where we expect to hear more regarding open access appeals. Finally, we believe the company should continue to make selective acquisitions, like this week's purchase of iMall.

To: TARADO96 who wrote (25867)	7/16/1999 8:26:00 PM
From: RocketMan	Read Replies (2) \| Respond to of 41369

True AOL longs should be enjoying the summertime and not even looking at the stock price. Just look in every now and then to ensure that the fundamentals have not changed. Let the funds sell if they want to, let the nervous nellies worry about Grennspan, Argentina, or whatever, let the cable techies talk about HFC or whatever, let the shorters short, let the worrywarts get warts. In the long term, AOL is where the action is, unless and until someone figures out how take the internet and ecommerce lead. For me, I am not letting Uncle Sam take any of my profits, and will think about selling in 3-5 years.