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

To: t2 who wrote (32784)	10/18/1999 9:00:00 PM
From: puborectalis	Read Replies (2) \| Respond to of 41369

America Online (AOL) 106 1/4 -2 1/4. Each quarter, investors line up to play Yahoo! (YHOO) and America Online (AOL) earnings. And, almost every quarter, they get burned. What many an online investor has yet to figure out is that these stocks have been near-term post-earnings disasters. The problem is that when the numbers are actually released, while always exceeding published expectations, they are usually only in line with the whisper number, which for tech bellwethers is the estimate that really matters. Given that the stocks often rally as much as 50% in anticipation of strong numbers, in line results are simply not enough to keep the propeller blades spinning; although Yahoo's latest qtr number was an exception (actual $0.14 vs whisper of $0.12 and mean of $0.09)... Would expect line of investors interested in playing AOL's fiscal Q1 results to begin forming late tomorrow or early Wednesday, as numbers are due to be released after the close Wednesday. Fortunately, for those looking to play the stock, AOL shares have fallen 14 pts or 12% over the past eight trading sessions, which may have shaken out enough hands to set stock up for a post-earnings rally. However, history is not on the side of the longs. In the past two quarters, AOL has exceeded Wall Street views by 2 cents per share. In reaction to the better-than-expected results (relative to published estimates), the stock has fallen 4 1/2 pts and 10 pts, respectively, on the following day of trading... Another sector of the investing public that has been slow to unravel the sell-the-news trend in these stocks is the analyst community. Each qtr, the pundits pound the table on these names going into earnings. This qtr is know different... Investors ignored early weakness in tech sector this morning and bid up AOL shares more than 2 pts in early trading, after Merrill Lynch analyst Henry Blodget reiterated his AOL "buy" rating. According to Blodget, AOL earnings should come in around $0.13 a share, with a penny or two upside possible. First Call survey of 32 analysts also calls for EPS to post at $0.13, compared to yr-ago net of $0.05. Blodget believes that one of the key numbers AOL reports will be net new subscriber additions for AOL North America, as this is where cannibalization would show.... Irrespective of AOL's reaction to earnings, the near-term trend (4-6 weeks) is likely to be downward, as investors have few reasons to bid up stock with earnings behind AOL and with continued equity market uncertainty ahead of it. Word of advice: Before purchasing any Internet stock, you should read the charts, as even the few companies with earnings are driven more by technicals/trends than fundamentals/valuation. - DS 14:46 ET ******