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: JayPC who wrote (36889)	1/10/2000 1:14:00 PM
From: Joe S Pack	Read Replies (2) \| Respond to of 41369

Jay, That is what I pointed out in my previous message. But this deal is not just pure Cable access. AOL will get lof of other valuable assetts like Atlanta Braves, CNN etc. But here is a conservative evaluation by one Analyists. RESEARCH ALERT - Time Warner , AOL LOS ANGELES, Jan. 10 (Reuters) - PaineWebber Securities entertainment and new media analyst Chris Dixon on Monday said a merged America Online Inc. and Time Warner Inc. should carry an equity value of $450 billion, or 15 times estimated annual revenues of about $30 billion. -- targeted current stock prices at $90 a share for AOL and at $135 a share for Time Warner, based on the merger. -- maintained a buy rating on Time Warner share up to $130 a share and said appreciation beyond that, ``will be highly dependent on more details.' -- said merger strategically accelerates Time Warner's Internet strategy by several years and solves AOL issues over access to content and accelerating its broadband strategy. -- Time Warner shares were up 29-13/16 at 94-9/16 by mid-afternoon. AOL shares were up 2-1/4 at 75-1/8. Both stocks are traded on the New York Stock Exchange. -Nat

To: JayPC who wrote (36889)	1/10/2000 1:38:00 PM
From: David E. Taylor	Read Replies (2) \| Respond to of 41369

Jay: I agree with your comments, I was looking for a AOL content deal with Time-Warner or some other large media company, not an outright merger. In the short term, what the analyst community values the combined companies at may well dictate the price of AOL's shares. If they all put a rosy glow on the merger, we could get back into the 90's over the next few weeks/months, who knows? But IMO, we can forget about the higher internet style valuations we've come to expect. David T.

To: JayPC who wrote (36889)	1/10/2000 3:27:00 PM
From: Steve Robinett	Read Replies (1) \| Respond to of 41369

--Jay You comments seems to me to be both insightful and worth even more attention. Until today, AOL was in two business, "connectivity" (ISP) and "community" (portal). The connectivity business is growing between 35-50% but is a low margin business. (The last time I figured it out, it cost AOL about $17.50 of the $21.95 it got from subscribers to provide Internet service for a month.) The "community" business is a high-margin advertising and e-commerce business but accounts for only about 23% of AOL's revenues, though the vast majority of AOL's earnings growth. Now , AOL has gone into the content business, merging with Time Warner, a company with at 5-year sales growth rate (according to Yahoo) of 17.25% as compared to AOL's 110% five year growth rate. What this means, among other things, is that AOL's high growth rate advertising and e-commerce business will now have to tow two sluggish businesses (connectivity and content) not just one. This attempt at vertical integration, IMO, has reduced the future growth potential of the combined companies and their combined valuation. In this case, longer term, the sum of the parts is probably worth less than the whole. Best --Steve p.s. Short term, Wall Streeters are shorting AOL and buying TWX to arbitrage the valuation difference between the two issues. This will continue until the valuations relative to each other approximate the 1.5:1 merger.