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To: Hobie1Kenobe who wrote (77827)	9/20/1999 12:32:00 PM
From: Bob Kim	Read Replies (1) \| Respond to of 164684

JF3, RE: ML AOL comments Blodget said that the Sep quarter looks strong and if that turns to be the case, then Dec quarter should be even better. He indicated the stock was weak due to concerns over MSN and NetZero. Bob

To: Hobie1Kenobe who wrote (77827)	9/20/1999 1:49:00 PM
From: Glenn D. Rudolph	Respond to of 164684

This is for all that are interested: Investment Highlights: * We continue to believe that AOL is not yet seeing any negative impact from pricing pressure and that third and fourth quarter results will be strong. * The AOL PHONES issue trades at a highly attractive valuation discount of 6.7%. We continue to recommend it. * The convert is included in our Convertible Model Portfolio as an Equity alternative. America Online/TRB PHONES 2.0% 5/15/29 America Online (AOL/$85; D-1-1-9) continues to lag the rest of the leading business-to-consumer (B2C) Internet stocks, primarily as a result of concern about potential pricing pressure in the access business. We continue to believe that AOL is not yet seeing any negative impact from pricing pressure (on the contrary, the bundling deals appear to have jumpstarted Compuserve?s subscriber growth without cannibalizing the growth of the AOL service) and that CQ3 and CQ4 will be strong. In recent days, the access concern has been exacerbated by 1) the IPO roadshow of NetZero, a company that offers Internet access for free, and 2) an impending investor day at Microsoft on Thursday, September 23, at which Microsoft will review its Internet strategy. We continue to believe that investors should monitor the progress of NetZero, Microsoft, and other companies pushing the access issue, but unless we see hard evidence of cannibalization, we will maintain our outlook and rating. We continue to believe that the Q3 results and Q4 will provide positive catalysts for AOL, as will the launch of AOL 5.0, which we currently expect to be in early October. (H. Blodget 9/20/99) The AOL PHONES, issued by Tribune Co., trade at what we view as a highly attractive 6.7% discount to theoretical value and we continue to recommend them as an Equity alternative. At $104-1/2 vs. $86 for AOL common, the issue has a theoretical value of 112.0 using model inputs of 40% annualized stock volatility (capped) and a credit spread of 119 bps over the five year Treasury. Our one year total return projections are +14.8%/-8.4% in response to a price change by the common of +/-25%. Conversion premium is 27.9% and the current yield is 3.0%. The PHONES are currently callable (call price = 166.4) and are rated A3/A- by Moody?s/S&P. (9/20/99). Bulletin United States 20 September 1999 T. Anne Cox, CFA First Vice President Preston M. Harrington III First Vice President Today In Convertibles AOL - Expect Strong Results for 3Q and 4Q Merrill Lynch & Co. Global Securities Research & Economics Group Global Convertibles Research Group RC#11326301 Convertibles