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Strategies & Market Trends : Telebras (TBH) & Brazil -- Ignore unavailable to you. Want to Upgrade?

To: Art Baeckel who wrote (21272)	8/8/2000 1:14:06 PM
From: Art Baeckel	Read Replies (1) \| Respond to of 22640

UPDATE 1-AOL-LA shares up 10 percent in stock market debut Reuters Company News - August 08, 2000 12:08 Copyright 2000 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. Jump to first matched term By Reshma Kapadia NEW YORK, Aug 8 (Reuters) - Shares of America Online Latin America Inc. rose 10 percent in their stock market debut on Tuesday following an initial public offering that raised $200 million -- far below original expectations of $425 million. Shares of AOL-LA , a venture between U.S. Internet services powerhouse America Online Inc. and Venezuelan media conglomerate Cisneros Group, were up 13/16 to 8-13/16 near midday on the Nasdaq. In its IPO, Fort Lauderdale, Fla.-based AOL-LA priced 25 million shares at $8 each, the bottom of a lowered price range. The shares were originally expected to be priced at $15 to $17 each, but the range was cut to $8 to $10 last week. Before the IPO, investor interest was expected to be lukewarm for several reasons, including overall tempered response to new issues and scepticism about how AOL will transfer the power of its U.S. brand to Latin America. Investors also were unwilling to pay the premium that a pricing of $15 to $17 a share would have given the company, which posted about $51.2 million in losses on revenue of $5.2 million for the nine months ended March 31. Critics of AOL-LA have said the company faces stiff competition from entrenched local players in Latin America, most of whom staked out their territory much earlier than AOL and are backed by local media and telecommunications heavyweights. Among its competitors are Universo Online SA, the leader in the Brazilian market; Terra Networks SA , Telefonos de Mexico , and Microsoft Corp. While some analysts argue that AOL has been slow to get in the game, many also concede that it is still very early in the competition, with only a fraction of the expected Internet users in Latin America already online. Even leaders in the region will have to continue to spend and remain aggressive to stay on top when a larger chunk of the population is online, they say. About 67 million users are expected to be online by 2005, up from about 16 million in 2000, according to Jupiter Communications. AOL-LA introduced its services in Brazil last year at the same time that free access was beginning to pervade the market. It launched service in Mexico in July and began service in Argentina today. While some analysts agree with AOL's contention that free service is not viable in the long term, they also warn that the presence of free Internet access is likely to depress the pricing environment. "Free access has been a difficult business to make work," said Lucas Graves, an analyst at Jupiter. "As long as a couple people are willing to (offer it), it still sours the market for AOL-LA." AOL executives contend that once users get a taste of its services, they will not go back to free access, especially because of the convenience and ease of its service -- especially important for AOL-LA's target market of users who have not yet come online. "They have a war chest of talent and financial prowess and general business acumen that none of the other rivals could hope for," said David Menlow, president of IPOfinancial.com. "AOL-LA is here with a mission; this is a crusade for them. They are going to make this work, so the day-to-day price movements are incidental to what they are trying to accomplish."