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Technology Stocks : America On-Line: will it survive ...? -- Ignore unavailable to you. Want to Upgrade?

To: MW who wrote (5261)	10/26/1997 1:14:00 PM
From: jack rand	Respond to of 13594

>>Accounting restatements-- this is an industry in the early stages >>of creation and it is very understandable that certain income and >>expense items might get reclassified as the business model gets >>better defined You'll excuse me, but that's just the sell-side crap talk. Accounting-wise, there's nothing new under the sun in cyberspace. The SEC went after AOL for garden-variety overly aggressive accounting. In accounting lingo: 'premature recognition' of revenue. AOL was recognizing revenue from up-front Tel-Save payment in excess of what was reasonable; and ,for example, taking a one-time hunk for 'exclusivity', when standard practice is to amortize recognition of such things over the life of the deal. And so on. There are only so many ways to structure business deals. Given the complexity of deals in areas such as real-estate, media, and finance, there's nothing any Internet outfit would do that would break new ground.

To: MW who wrote (5261)	10/26/1997 2:47:00 PM
From: craig	Read Replies (1) \| Respond to of 13594

MW, i read your 4 points from the 12:22 post,and nowhere did you mention the fact that aol does not make money. i use worldnet and own at&t stock and i find it ridiculous that aol is valued more than a co. such as at&t. worldnet has approx. 1 mill subs and growing at double digits each month. not to mention the wireless internet they will soon unveil, do you and the other bears really think aol will keep on going higher with the likes of yahoo,netscape,msft,pointcast etc,etc? this stock will soon come down to earth. it must be 85% owned by institutions. i don't know of any other co. with such a high percentage of institutions owning it. this will be interesting when and if any of them decide its time to get out. best of luck to everyone. -Craig

To: MW who wrote (5261)	10/26/1997 4:28:00 PM
From: Yikes	Respond to of 13594

MW, Re: Much up in the Air That's more like it. A civilized discussion between the bulls and the bears. I like the positive spin you put on the following points because conversely I could put a negative spin on them: 1. Subscriber number. The make-up of the subscriber number was never given which rubs me all the wrong ways. AOL hasn't (or won't) disclose how many regular subscribers they have versus the trial members. Such ratio is important because one can then come up with a conversion rate from trial to regular members. From which one can then calculate the rate of subscriber growth, the effectiveness of AOL advertising, cost of network operations, and ultimately how much AOL could charge for third party advertising as compared to printed and radio medium. The subscriber make-up could be counted easily in AOL's database, I am sure. There is only one reason for AOL not to disclose it, and that is, the trial (or free) membership is embarrassingly too high. (See #4) 2. Accounting restatements. Earning reports are actually non-audited when AOL announces them (read the fine prints in the next report). I wonder if it is during the audit process afterwards that (one of the big 3) accounting firm discovered the error. I can't believe AOL's in-house accountant could make such an error without some top-down directions. Motorola, for example, signs multi-year deals all the time and they never have trouble with accounting. In fact, I have never seen a multi-billion dollar company make such mistake before. (See #4) 3. Brand name. Why do you and "many people you know" love AOL? Is it really brand loyalty or merely habitual dependency? I, for example, depend on SI for the balance of views here (freedom of expression by both bulls and bears). But if I discover another message board with broader readership and as easy to use, then I would consider switch over or participate in both. You even conceit that AOL is not state-of-the-art and its capability is only adequate. Far cry from other brand recognition such as Coke (tastes better) and Nike (looks good) in which people pay a premium for the brand names. AOL isn't and can't charge such premium. There is in fact a anti-AOL sentiment on the Internet. Many IRC users look down on AOL users because they ask dumb questions. One user in the Iomega thread here on SI has to post "test" messages everyday in order to read new messages. If anything AOL is a negative brand name. Once AOL users encounter such negative sentiment, most grow out of it. I witnessed many such growth in IRC last summer. If the user really wants to take the full advantage of the Internet, such as point-to-point gaming and total freedom in services (PointCast, CNN, or NetCenter?), then the user will grow out of AOL. 4. Management. I agree Steve Case has done a masterful job. He convinced many that AOL is worth more than it does by doing #1 and #2 above. AOL does have a small niche in novice computer users, but the big growth market from now on is in WebTV and NC's, and they belong to Microsoft, Oracle, and the local ISP's. Unless Case can find ways to get into that game too, AOL will get stuck right here without significant growth. Just take a poll on SI, how many people use AOL? Yikes

To: MW who wrote (5261)	10/26/1997 5:48:00 PM
From: Zoltan!	Respond to of 13594

You rely on "the Greater Fool Theory". Period. Regards

To: MW who wrote (5261)	10/26/1997 9:43:00 PM
From: Dan Ross	Read Replies (2) \| Respond to of 13594

3} but in no way would they have intentionally mistated #'s or let aol lead them the wrong way. They are professionals and have reputations at stake which they would never jeopardize for one co. This is a non- issue. Don't work in accounting, right??? I have heard, read of, and seen stories of companies that get away with murder....these auditors want a company that comes back for more business as well as other services...consulting, etc..... 4. Management-- Steve Case et. al. have done a masterful job so far and I don't see any reason to doubt that they won't be able to adapt to a constantly changing business climate and do whatever is necessary to broaden and strengthen the huge lead that aol has created in this market. I think that they have done a good job too....However, this summer I tried to use their service while in Dallas interning for an asset management firm.....The service was HORRIBLE....It was horrible 2 years prior to that too.....Also, didn't Mr. Case himself sell a significant amount of shares in the past quarter??? Dan Ross (bearish but no position at this time)