Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: CCR who wrote (27412)	7/30/1999 5:48:00 AM
From: Jeff Dryer	Read Replies (1) \| Respond to of 41369

Ok, while I don't agree with it because the likelihood is the options will be converted to shares... the options are already vested... here it goes. 3 year model for AOL with outstanding shares... not fully diluted shares. I'll use a P/E of 100 this time and a 60% revenue growth rate. Each column represents a full year (eg."1999" represents a full year of financial results ending June 1999). Growth rate assumption for Revenue: 60% per year Net Profit Margins: 15% P/E used for model: 100 (a premium for being the online leader) Share Growth: 10% per year $ and shares in millions Actual Est. Est. Est. 1999 2000 2001 2002 -------- ------- ------ ------ Revenue $4,800 $7,680 $12,288 $19,661 Net Income $396 $1,152 $1,843 $2,949 Net Profit Margin 8.3% 15% 15% 15% Outstanding shares 1,082 1,190 1,309 1,440 Market Cap (Net Income X 100 P/E) $115,200 $184,300 $294,900 Stock Price $96.81 $140.79 $204.79 Discount the $204.79 stock price in year 2002 back at a 15% return You would be willing to pay $134.65 for AOL now if you believe the results presented in the model will occur, and are willing to hold AOL for 3 years, and you are satisfied with a 15% return on your money per year. If you say "Well... that 15% return is NOT ENOUGH... I need 30% return." Discount the $204.79 stock price in year 2002 back at a 30% return You would be willing to pay $93.21 for AOL now if you believe the results presented in the model will occur, and are willing to hold AOL for 3 years, and you are satisfied with a 30% return on your money per year.