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

To: Pancho Villa who wrote (8682)	3/9/1998 12:12:00 AM
From: Jason Cogan	Read Replies (2) \| Respond to of 13594

Pancho: I agree with all you posted. As you recall, my fundamental reason for being short AOL (actually short calls) is because I don't believe the valuation. According to my figures, AOL is worth more like $15 billion including option dilution, and that means they must earn approximately $15 billion over the next five years. Tough to do, especially from a standing or even negative start. However, these are all valuation questions, which even in the best of cases only kick in over the medium to long term. In the short term, the market only seems to be concerned with subscriber growth. Like you, I view the current ISP business model as unprofitable. Apparently ATT and MCI do as well, but the telcos are willing to enter that business in order to retain customers and achieve greater synergy with their other businesses (such as phone calls over the internet). In the short term, the market focuses on subscriber growth. Until that number cracks, I do not believe AOL will drop substantially. Since this number is unaudited, what will cause it to crack? Regards, Jason Cogan