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

To: SLSUSMA who wrote (37298)	1/11/2000 6:08:00 PM
From: RocketMan	Respond to of 41369

Might be a bit late to do this, but buying near term puts on AOL until it bottoms out might be a good move. When it is close to the bottom (wherever that is), you can close out the puts and take the profits to accumulate either aol or twx. Hard to time, though.

To: SLSUSMA who wrote (37298)	1/11/2000 7:17:00 PM
From: The Other Analyst	Read Replies (1) \| Respond to of 41369

I think the negative views on AOL are overdone. Or to put it another way, the positive views before the deal were overdone. AOL at $73 3/4 and a beta of 2.43 was presumably priced to deliver about 18.5% rate of price appreciation over the next few years. The EPS estimates were for 50% annual growth from FY 2000 EPS of $0.48. Grow the EPS 50% annually and the stock price 18.5% annually and around about 2008 you could see a reasonable multiple of 23 times earnings. And how did the market expect AOL to grow 50% per year for 8 years? Where was it going to get the content? Where was it going to get the broadband distribution? Well, obviously it would have to do some acquiring. The TWX deal or something like it was already in the AOL valuation. And then some. The Internet is great, but the reason is that some day the Internet platform will be used to make money. And when that day arrives (as it did in the last two days for AOL) it could turn out to be a little disappointing. For those who don't like the TWX deal, what do you expect instead? Buy DIS? Buy NBC? Buy Hughes Electronics? AOL was never going to make enough money to justify $73 per share without a major deal. Time to get real.