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: will it survive ...? -- Ignore unavailable to you. Want to Upgrade?

To: Zoltan! who wrote (5258)	10/26/1997 1:07:00 PM
From: jack rand	Respond to of 13594

Cramer's remarks in general are correct, especially about the dynamics of momentum stocks and about confusing a company and its stock. However, in some specifics he's off base; especially in notion of AOL using its inflated paper to buy companies with real earnings and cash flow. There's paper and then there's paper. Recall that AOL tried to buy Compuserve; but HRB took WCOM's paper instead (for the same $ value). For any target company with real earnings and cash flow AOL would face stiff competition from companies with inflated paper that's backed by far better assets and financials than has AOL. Presumably with telecom accounting for 60% of its expenses, AOL would have tried to use its paper to buy something like Brooks Fiber (bought by WCOM) which could have meaningfully reduced its costs and added cash flow. But there's just too much competiton from far better paper. As to lousy service and "manner of the IRS" Cramer says: "so what? They can do it because they can get away with it. That is no reason to ever short a stock." Well, short term maybe. But things like that do have a way of catching up to the fortunes of companies, especially those that stake so much upon 'brand'.