Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: johny who wrote (7722)	2/12/1998 2:37:00 PM
From: RLM	Read Replies (1) \| Respond to of 13594

I'm short at 106 1/2. Plus I have Feb 110 puts. Lost about 25% of my portfolio because of this staged event.

To: johny who wrote (7722)	2/12/1998 2:38:00 PM
From: Hawk	Respond to of 13594

don't ask 70's.

To: johny who wrote (7722)	2/12/1998 2:39:00 PM
From: craig crawford	Read Replies (3) \| Respond to of 13594

109 7/16

To: johny who wrote (7722)	2/12/1998 2:51:00 PM
From: Astarte	Respond to of 13594

To my fellow AOL shorts: Where are you short at? I am short at 109 and have a rather limited pain threshold... Short at 101 (only 50 shares, thank God.....) Waiting for an opportunity to average up!

To: johny who wrote (7722)	2/12/1998 3:43:00 PM
From: Keith J	Read Replies (1) \| Respond to of 13594

I'm short at about 105 1/2. You know, it's interesting to read about the Tel-Save deal. While it may result in recurring revenue for AOL based on usage (I can't find any detail on what level/percentage), the original deal was a minimun $120 million over 40 months. Big deal, eh. Except that the way the deal was structured, AOL is going to recognize $50 million in calendar year 1997, or in other words, they get to recognize over 40% of the deal in 20-25% of the time. Although this is old now, due to the Compuserve addition, and it sounds like Tel-Save wants to spend even more on marketing. Below are some cuts from press releases on the AOL-Tel-Save relationship: The Company (AOL) entered into a 40-month electronic commerce agreement in February 1997 (the "Agreement") with long distance telephone service provider Tel-Save, Inc. Under the terms of the Agreement, the Company received $100 million in cash and warrants valued at $20 million (the "minimum contract value") as consideration related to a Tel-Save product offering to the Company's subscribers. The Agreement also contains a revenue-sharing arrangement that, based upon subscriber usage levels of the Tel-Save product offering, provides the Company with an opportunity to earn in excess of the $120 million minimum contract value. The Company (TALK) currently estimates that between 2% and 6% of AOL's customers will need to sign up for the Company's long distance service in order for the Company to break even on its investment in the AOL Agreement. With results tallied early this morning from 24 hours of online marketing to AOL's approximately 9 million domestic members, Tel-Save deemed its online test a huge success. As the final phase of online testing prior to the off-line media blitz upcoming in January, AOL sent a pop-up advertisement to its entire base at 6:30 a.m. yesterday and used banner ads and a position in the welcome area to attract customers to its 9c a minute revolutionary long distance service offering. AOL members went to the sign-up area by clicking on the ad or entering keyword: LD. Preliminary results suggest that the surge of AOL customer demand was driven by the value of the offer and the convenience and ability to view records of calls made within minutes. Throughout the day, the AOL Long Distance website had over 500,000 hits as AOL members checked sample bills, reviewed pricing, and signed up for service. The Company expects the offer to build momentum with repeated online advertising, mass media in the form of print and radio advertising, direct mail and word of mouth among AOL members. Additionally, the service offering will be featured on the tool bar (member perk) in AOL's new version 4.0, code-named Casablanca, and promotional offers such as million dollar give aways, prepaid calling cards bundled with the new software will be used to attract AOL members. All AOL members can easily access the long distance members area by entering keyword: LD. The contract with Tel-Save requires AOL to recognize $57 million through the end of calendar year 1997. $12 million was recognized during the quarter under the contract, with a signing bonus, an exclusivity component, and the delivery of production work for Tel-Save's online area. Revenue recognition in the June quarter will be higher than the quarter just-ended. Those amounts will increase again in the September and December quarters. There were costs associated with those revenues, particularly as it relates to production work and the deliverables made under the contract's provisions. The company's goal over the next couple of years is to develop advertising relationships like this one, where commitments are longer-term and of a greater dollar value. (Later reduced to about $50 million I think at SEC's request) KJ