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

To: Christopher Grace who wrote (6696)	1/6/1998 6:17:00 PM
From: Steve Robinett	Read Replies (3) \| Respond to of 13594

Chris, <<high-speed access will not implode AOL>> I agree. It will be more like the death of a thousand cuts, slow, painful and over a long time. My point was that the demand for high-speed access could grow quite rapidly as "convergence" between computers and TV continues. In that universe, AOL has little to offer cable companies and the Time-Warner/US West deal shows companies already preparing for a wide bandwidth future. Content? Alfie The Elf? That competes with Disney? As for a 'buy' recommendation from Paine Webber, so what? Most of the houses on the street have buy recommendations on AOL. That's one of the reasons I think the stock will top $100/shr before the next earnings announcement. A buyout? Surely you jest. Who would buy it, why and for how much? To see AOL as a business opportunity, someone would have to solve the very problem we're talking about--how AOL is going to go about making a living over the next 10 years. They would have to have a vision AOL currently lacks. And what would they pay for it? Certainly not the current inflated market price. In theory, people are supposed to buy assets for their potential return (except AOL stock, of course, which people buy because it's patriotic). Discount AOL's cashflow over the next ten years and see what kind of buyout price you get. The price comes out between $40 and $60 dollars/shr. Opps. BTW, why are all those insiders selling? Best -Steve P.S. Sorry my answer isn't as complete as usual. I'm a little pressed for time today.

To: Christopher Grace who wrote (6696)	1/6/1998 7:40:00 PM
From: Keith O'Neill	Respond to of 13594

AOL's future is the Yahoo business model but some serious problems are: Yahoo has a head start and already has more users than AOL, Yahoo's users tend to be literate and have a higher advertising value and no hand holding cost, AOL has hit the saturation point of sending spam through a phone line, AOL doesn't even have a significant presence on the Internet, AOL's market capitalization is 3 times Yahoo yet many people see Yahoo as overvalued making AOL at least 3 times so. I don't think AOL won the war against Bill Gates, he just decided to stop investing in a business model that can't make money and into one that will. The Internet will become available as a utility like cable TV sooner than AOL will make profit that justifies its price. I think the analyst that said AOL is a prime buy out candidate should be checked into drug rehab. AOL has done a great service bringing the masses to the online world and educating people in things like how to operate a mouse, but in the end AOL is plowing and planting crops for Bill Gates and others to harvest.

To: Christopher Grace who wrote (6696)	1/6/1998 8:20:00 PM
From: Todd Daniels	Read Replies (1) \| Respond to of 13594

>>Given that AOL has over $250M in guaranteed future ad and e-commerce >>revenue under agreement or already paid-in and waiting to be booked, AOL's underwriter, BA/Robertson Stephens, has noted in it's reports that the average life of the $240m is three years. That's $80m per year; $6.7 million per quarter -- $0.67 gross per share per year; $0.17/Q. Even if margins are 70%, at AOL tax rate of 40% that's $0.28/shr net per year; $0.07 per quarter. AOL is trading on expectations for over $1.60 in F99 and $2.95 in F00. That's very aggressive presumption of future deal flow. I agree that high speed access isn't the issue. Neither is membership. AOL's biggest challenge isn't growing members or even keeping existing ones, but keeping them in ad space controlled by AOL. As web content becomes better and better and more and more AOL subs become less newbies and more adventurous, keeping subs in AOL space becomes more difficult. It boils down to content. In that it's AOL against the multitudes spending billions on the Web. Odds of 'killer content' coming out of AOL versus that is like comparing odds of life on Mars with odds of it in the entire universe.

To: Christopher Grace who wrote (6696)	1/7/1998 1:45:00 AM
From: WBendus	Respond to of 13594

You and the Fools seem to have a pretty high regard for AOL stock. I should like to remind those novice investors, that a company and its stock should be viewed differently. Quite often a company that is percieved to be a good company also has a stock which is percieved to be good. But the problem lies when investors ignore the fact that one does not necessarily beget the other. AOL may be a company which is able to offer the "Brand Name" of the internet, it may be rich with content, it could please each and every subcriber beyond expectation, but this does not necessarily mean that the stock is always a good buy. Currently the stock is trading at 54 times 1999 earnings, which are 18 months out. Granted, the revenue growth has been absolutely stellar over the past couple of years, but the company has not yet provided meaningful earnings. Furthermore, unlike a Coca Cola who has demonstrated continued consistent earnings over a long period of time, AOL earnings have been anything but consistent. In fact, analysts are befuddled over the longer term impact of the announced CompuServe merger. Sure, the deal is expected to bring in about $150 to $175 million in gains from the spinning off of a division of AOL and could bring lower computer services costs to the company, in a convoluted series of transactions in the merger. But, there is the reality that CompuServe has been a big time money loser of the years and there is no certainty that AOL can turn it around and the deal could wind up being extremely dilutive to earnings. Beyond this one example of potential danger for AOL shares and estimated earnings, lies many, many more potential pitfalls for the company. There are insiders selling 100's of thousands of shares, percieved back stabbing by AOL in its "Exclusive Agreements" with Barnes and Noble and Amazon.com, press releases which serve as little more than hype for the company, extremely low barriers to entry for competition, persistent shorts, a slowing in the amount of revenues paid per subscriber, better and faster technology (cable connections), technical and growth blunders of the past, present and future, etc..... With this much potential for competition and lost opportunity, I can hardly make a justafiable argument for owning the shares at anything near these prices. In fact, this company is starting to remind me of all the promise that was expected of Micron Technology (NYSE: MU) in late 1995. But, unlike the top experienced in that stock, there are more and better warning signs for AOL's top. Wayde.