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

To: jack rand who wrote (6085)	11/22/1997 2:12:00 AM
From: Steve Robinett	Respond to of 13594

Jack, >>The 80% are upgrades and second units.<< >>Also, first time buyers as % of total have dipped to 30-40% vs. 60-70% in year past. That will blip up for X-Mas, tho, as usual.<< Interesting numbers, and you've changed my mind that under $1000 PCs dramatically help AOL. Economically speaking, upgrading to under 1k PCs means the marginal utility of "bigger, faster, more powerful" has dropped off a bit for the time being, which is really a response to available software. The apps most people use run just as well on a 166 Pentium as on a 300MHz Pentium II. The high end stuff goes into the server market. I don't see any news from Comdex that will change that. Gates was muttering about voice recognition--ho hum. Best, Steve

To: jack rand who wrote (6085)	11/23/1997 11:30:00 AM
From: Steve Robinett	Respond to of 13594

To anyone, Just for the sake of argument (and I'm sure I'll get one), I tried to ballpark AOL's current value using the MOST generous assumptions I could allow. Assuming 12 million customers with Compuserve at $17.37/month plus 16% "Other Revenue", I get about 3 billion in revenues annualized. At 118 million shares, that's about $25.42/share. Because the question of AOL's ability to successfully leverage its subscriber base is still open, give them a market cap of 2.5x revenues--a per share price of about $63. Since AOL has a large "faith component" among Wall Street brokerage houses, give AOL a price anywhere between $60 & $85 per share and you can probably make some kind of argument to support it--but $100 to $125 a share! What is the street thinking?