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

To: Harry Larson who wrote (7834)	2/13/1998 3:28:00 PM
From: Keith J	Respond to of 13594

Sorry, but even the MF conference call readings are a bit confusing (or misleading). Below is from the Sept. quarter call: <<They came in at $0.16 per share including a $0.04 per share favorable impact from their operating relationship with Excite and sale of some Excite stock. Of the $0.04, $0.02 is in operating revenues and the other $0.02 relates to the sale of some Excite shares in the September quarter which is recorded as other income. They will be recognizing a $19 million gain related to Excite over 5 years which will be included in other revenues. In November 1996 they entered into three agreements with Excite providing for the sale of Webcrawler to Excite and an agreement for AOL to provide carriage for Webcrawler and a 5-year license agreement under which they license technology from Excite that they use in NetFind. In connection with these agreements, they received 1,950,000 shares of Excite. As this transaction regarding Webcrawler was finalized in March 1997, they valued the shares at the then current price of $11.70. Given that they had a cost basis of about $3 million in the Excite shares, the total gain to them is about $19 million. Given that they have certain performance obligations under the 5-year license agreement and to be conservative, they are spreading the $19 million gain over 5 years. Since this relates to operations, such amounts will be recorded as other revenues.>> It does seem that 2 cents is high, but the point was in regard to how analysts view this gain. Even though my impression was they sold the same amount of stock in the December quarter, so at least from AOL's standpoint, even though the number of shares changed, the dollar value of these gains shouldn't have. KJ