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Strategies & Market Trends : Roger's 1998 Short Picks -- Ignore unavailable to you. Want to Upgrade?

To: Jon Tara who wrote (297)	1/7/1998 1:50:00 AM
From: WBendus	Respond to of 18691

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.

To: Jon Tara who wrote (297)	1/7/1998 10:29:00 AM
From: BDR	Read Replies (1) \| Respond to of 18691

<<Ron, I understand that one can use AOL without a dial-up connection to AOL. Yea, if you use an ISP, you can access AOL through your ISP connection. The question is, "why"?>> I think the question is why use AOL (or Compuserve in my case) as an ISP? It gets expensive if you are charged by the minute, flat rates have lead to capacity problems (though not unheard of anong ISPs either) and Compuserve (don't know about AOL) slows down internet access considerably. Plus, I just don't use Compuserve much anymore and may drop it altogether. If you travel it is nice to have local access in various cities and that is a plus for AOL and CIS.