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: Brian K Crawford who wrote (30792)	9/15/1999 10:01:00 PM
From: Time Traveler	Read Replies (1) \| Respond to of 41369

I am speaking this through my observation. In general, price drop with low volume is a very bearish sign. That means the majority of the folks who want to sell out are still in. It takes a big sell with high volume to drive them out. Do you remember in early August? AOL started to turn around only after a pannick selling. Half a year ago, I remember M. Siebert commenting on AOL on CNBC. She said AOL has a lot of investors sitting on ungodly sum of profit. They will bail out sooner or later.

To: Brian K Crawford who wrote (30792)	9/15/1999 10:03:00 PM
From: Steve Robinett	Respond to of 41369

Brian, Nice post. Of the four AOL positives you mentioned, I don't see AOL 5.0 or DSL as a big mover for the stock, since investors already know about the software upgrade and AOL's DSL agreements. The same for the multi-million dollar deals. Almost every day for months, there has been a significant announcement of a new AOL deal and the investor community has treated it as though it there Coke announcing that someone bought another bottle of Coke, that is, business as usual. But Xmas, that one, I agree. I think we are about to be subjected to a blitz of news about the enormous amount of e-commerce going on and among the first ideas people think of in relation to e-commerce is AOL. Your Negatives are interesting, too. On the free ISP issue, I still don't see any evidence that free ISPs will actually hurt AOL. I say evidence because there is evidence that AOL's price increase didn't hurt it. There was very little elasticity of demand. If AOL can keep the content interesting to its subscribers, they can charge for it even in a world with free ISPs, just like cable companies charge for content even though over-the-air TV is free. On the other hand, investors might shun the stock for awhile until they saw the free services were having little impact, if that turned out to be the case. Who's the best positioned to withstand a price war with advertising and e-commerce revenues, you ask. Yahoo. They don't have a network. Yahoo is all high margin ad revenue. Only 21% of AOL's revenues are high margin advertising and e-commerce. The other 79% come from subscriber fees. As I've mentioned before, I once figured out what it cost AOL per subscriber per month and the number then was $17.47. At $21.95 per subscriber per month, that is a very low margin business and a little algebra will tell you AOL cannot cover its network costs using only the 21% of its revenues that come from ads and e-commerce. If AOL did start slashing fees aggressively, it would truely squash the stock. I doubt that will happen but you never know. Best, --Steve