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

To: Tim Kenney who wrote (5643)	11/7/1997 11:58:00 AM
From: Sam	Read Replies (1) \| Respond to of 13594

Actually, ad revenue is generated by advertisers that are sucked into The Pitchman's hype and AOL's bogus subscriber numbers, along with companies that are not credible but hope to become so by "striking" deals with AOL. Why so emotional Tim? Bob is doing an excellent job of "sucking" in advertisers. Those advertisers must be "bigger idiots" to advertise on AOL. Short all the idiots that are advertising on AOL!!! They are all suckers!!! They have no idea how to run a company! All companies that sign with AOL will crumble into bankruptcy!!! Short them too!!! LOL again...ahh, this thread is great - seriously. I enjoy being one of the few bulls. The MF thread on AOL is full of mostly bulls, so this gives me a chance to see the bears mindset. Bob Pitchman indeed. S.

To: Tim Kenney who wrote (5643)	11/7/1997 12:18:00 PM
From: Todd Daniels	Read Replies (1) \| Respond to of 13594

Even I wouldn't have guessed at this accounting gimmick. 11/07/97 America Online Profit Hits Expectations, But New Sources of Revenue Falls Short The Wall Street Journal Steve Case, chairman and chief executive, blamed the slowdown in other revenue on two factors. AOL now classifies refunds and credits for merchandise against the other revenue category, as opposed to subscriber revenue. Subscriber revenue is online services revenue ($19.95/mo). Merchandise is an array of things from T shirts to PC gear sold directly by AOL from its self-owned online 'AOL Stores'. The $24m is 35% of total ad-commerce revenue for Q1. * So, AOL had been artifically inflating ad-commerce revenue by booking refunds and credits against online fees (which everyone assumes are unprofitable) instead of against the merchandise revenue stream. -------------------------------------------------------------------- The Wall Street Journal Mr. Case added that the company is also taking a far more conservative approach toward its accounting, which had often been criticized. He said AOL signed $80 million in marketing agreements during the quarter but booked only $5 million. Moreover, the company has a backlog of $224 million in advertising and commerce agreements with third parties. "The conservatism we're showing this quarter will position us for strong growth in other quarters," - N2K $18m/3 yr signed 09/18 but 1st payment not due until after IPO which was 10/29 (Q2) Therefore, $80m-$18m=$62m - Weighted average term of the $62m million deals is about 3 years, $62m/12 quarters = $5.16m. In other words, AOL just didn't allocate special amounts up front. * AND, the $244m 'backlog' is recognizable over about 3 years on average. =$81.3m/year, or just $20m/quarter. * ***** MUCH MORE IMPORTANTLY ********** * $80m Q4 ad-commerce + $5m Q1 = $85m * * BUT Q1 AD-COMMERCE WAS ONLY $68 million *** WHAT ACCOUNTS FOR THE $17 million decline? It can't all be abstention from taking 1-time up-front amounts of ad deals. Loss of smaller ad accounts at the margins??????