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

To: Pancho Villa who wrote (8644)	3/8/1998 11:44:00 PM
From: Jason Cogan	Read Replies (2) \| Respond to of 13594

Pancho: I also believe that some negative announcement will spark a downside wildfire. But I don't think new entrants, threats of competition, and a pricing war will be that spark. Such implications require too much forward thinking analysis, and Wall Street is currently in love with AOL's business prospects. As others have said, many money managers really do believe that AOL is the future of the internet. Perhaps this is because they are 50 years old, and have yet to really use the internet. For whatever reason, they fail to see the risks of competition, and their short term view of AOL is borne out by the supposed rapid subscriber growth. What concerns me is the subscriber growth itself. There has been a lot of talk on the thread about AOL granting discounts to existing members. Some have even suggested that AOL gives free months to existing members to prevent them from canceling their service. If we are to believe this anecdotal evidence, (and there is no reason not to), this strategy seems quite troubling for us shorts. Since membership numbers are unaudited, what's to stop AOL from continually expanding these figures? Wall Street (and the current crop of money managers) seems unconcerned about earnings (or lack there of). What's to stop AOL from continually reporting an increase in the number of subscribers? After all, this is the number that gets the most attention. Earnings are apparently unimportant to AOL shareholders. AOL's expansion of reported members will continue to seem plausible to the MM, since they are also aware that PC prices are falling rapidly. To me, this is the biggest flaw in the argument for being short AOL. What do you think? Any and all thoughts appreciated. Regards, Jason Cogan