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To: Glenn D. Rudolph who wrote (89431)	1/2/2000 4:07:00 PM
From: Bill Harmond	Respond to of 164684

Kudos to the NY Times!

To: Glenn D. Rudolph who wrote (89431)	1/2/2000 4:12:00 PM
From: Bill Harmond	Respond to of 164684

Robby this last week on AOL/YHOO: AOL VS. YAHOO! We are carefully watching the narrowing valuation gap between AOL and Yahoo!. Currently, AOL trades at a market value of $192 billion, compared to $120 billion for Yahoo!. This represents a market-cap ratio of 1.60, although over the past year AOL has traded at an average of 2.75 times Yahoo! and a high of 3.76. We believe this gap has been justified by AOL's ability to capture the most value from its large user base. We remain confident that Yahoo! will post huge numbers for page views and registered users, but we wonder how long it will be before time and/or revenue per user start to ramp. Will we see an uptick when Yahoo! announces quarterly results on January 11? We are eager to learn more about the performance of the company's emerging shopping mall, which logged five times as many orders this holiday season than in 1998. We also believe the numbers are adding up quickly on the international front. As of September, we estimate Yahoo! owned, in whole or in part, 21 foreign properties with more than 105 million unique users. With more effort focused on international markets, including the recent launch of Yahoo! Shopping in Europe and Asia, we believe Yahoo!'s excellent overseas positioning is a key driver of its rapidly expanding market value. At the same time, AOL remains at the top of our Buy list. We note that AOL captures nearly one hour per user per day and members appear to be on a continual shopping spree. We estimate that AOL's dollar volume of eCommerce (not its revenue but the volume passing through its network) will total $10 billion in C1999--more than all other eTailers combined. With the commerce boom, rental fees from merchants are reaching new levels. We further believe AOL is in a great position to charge more for subscription services including AOL TV as it executes its AOL Anywhere strategy. We believe the launch of AOL TV, expected by June, will demonstrate the power of the brand to capture more subscription revenue, a concept we have talked about but always seemed distant. We feel very comfortable paying less than $200 billion for a leading brand with 50% market share in the fastest-growing industry of all time