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Technology Stocks : AUTOHOME, Inc -- Ignore unavailable to you. Want to Upgrade?

To: E. Davies who wrote (13147)	7/30/1999 8:01:00 AM
From: polarisnh	Read Replies (1) \| Respond to of 29970

Eric, Balance out the equation a little bit. If you have 100,000 customers you can charge much higher advertising rates than you could for 4000 customers. Who knows that maybe enough to justify the cut in half of the monthly fees if you can prove high user hit counts to the advertisers? Steve

To: E. Davies who wrote (13147)	7/30/1999 11:25:00 AM
From: Jing Qian	Respond to of 29970

Not if your expenses are $21 per customer. Dont forget that the point is profit. I am not sure what the cost is for each customer. But I feel this is a fixed cost. Let's assume it's $21/month for the next 3 years. After the 3 years, most of the cost should have been recouped. But their subs number is a variable. They can tune the expansion rate by adjusting the price. If they reduce the price, they can make more money by selling volume. They may run the risk of deferring the compensation till 3 years later. But it's worth the risk by jumping start the membership increase while slowing down the competition from ADSL. Market grab and strengthening the @Home brand is more important than recoup the expense in the short run. Once you really have the lion's share(which T/ATHM doesn't have), they have plenty of time to recoup the cost. If T/ATHM don't act fast, ADSL could slowly dilute Cable modem's advantage. The risk is more when ADSL surpasses Cable modem in subscriptions.