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

To: yihsuen who wrote (14106)	8/12/1999 12:36:00 AM
From: Ed Zhao	Read Replies (1) \| Respond to of 29970

AOL clearly needs ATHM: 1. regarding the news that MSN is about to reduce or even eliminate connection charge in order to compete with AOL, AOL stressed that AOL's strategy is to compete in service quality. Without a broad band offering, it can hardly say anything about high service quality. 2. Acquiring ATHM makes economic sense for AOL: if one million of current AOL members are willing to convert into cable access at $40 monthly fee, it translate into $200 million/year in cash that will go straight to the bottom line. if five million subscribers is to convert to cable access at $35 monthly fee, it translates into more than $600 million in profit (after taking the effect of losing revenue from existing ATHM customers). 3. ATHM's Excite portal site is more successful than AOL's own portal site and attracts more views. 4. AOL has $3 billion in cash and generating annual cash flow of more than $1 billion, enable AOL to make stock + cash deal that will further reduce impact in earning dilution. 5. For AT&T, putting all eggs in the ATHM basket is a risky strategy if DSL catches up quickly. By allowing AOL to acquire ATHM, T will own 8-10% of AOL. 6. AOL has demonstrated it's willing to swing between rival parties for its own interest. Remember AOL first made a deal to use Navigator then turn its head a few day's later to accept IE as its default browser. And then again two year later, bought Netscape (effectively dumped Internet Explore). Go Asp