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

To: Glenn D. Rudolph who wrote (9092)	3/28/1998 1:36:00 AM
From: Stephen	Read Replies (2) \| Respond to of 13594

Glenn, my 'understanding' of AOL is overstated. I haven't understood most of whats happened recently with the market ... last earnings I had four plays, three shorts and one long. In retrospect I still believe I was wrong on only one ... but they all lost money for me. On two occasions, the long and a short, only an analysts comments sent the stocks (for me) the wrong way. The long was hilarious, after the company beat earnings easily, the analyst said he saw problems going forward. No details, and the price has recovered ... but it lost over 4 points next day.... and so far there's no problems on the horizon. On another occasion, a massive one time charge put down to a shift of accounting methods hid a substantial loss and an R&D and licensing balance sheet amortisation that was totally out of hand and growing. It would have been the next three years incomes and even with the charge-off grew by 33% over previous year !!. It was horrible and even the thread members who were long the stock were horrified ... but all that was reported was that the company exceeded estimates by a cent ! How does this relate to AOL .... well .... anyone who bothered to look at the details of my plays would have seen the facts. But no one cared. They were more concerned with hype than substance. We've seen it with recent earnings announcements. Lots of the tech companies are going downhill fast in my opinion..... too many players in the same arena that isn't growing fast enough or has growing competition from abroad. Does anyone see this .... do they care ?? To cut to the point, I believe most investors are lazy, or naive, or have a short attention span (this is something being leveled at the American people in the Clinton fiasco ... that the Whitehouse tactics are to spin it out till people lose interest).... or all of the aforementioned!! How many people who invest actually look at the balance sheet/P&L's at reporting time, but instead concentrate on the cc and earnings per share. They are concerned not with fundamentals, but with the stock price and if its going to go higher ... the two are no longer necessarily connected. So ... with AOL we have an industry leader, household name, the stock keeps going higher, it has earnings unlike most of the internet plays, it makes deals on a regular basis and reports good news consistently, has no Asia exposure, is at the forefront of potential e-commerce, has 'unlimited' future potential for growth and profits ... etc, etc ..... I'm sure you get the picture !. The key is not to understand the company or the stock, but understand the American investor. AOL is a microcosm of the whole market ... the ultimate self-fulfilling mechanism. The informed mm's didn't want any part of this market at the beginning of the year but had to play cause the 'general investing public' went ahead without them and started driving things forward. Everytime there has been a significant market sell-off, the public have stepped in and brought the prices back up. The reason ... "I'm in it for the long haul ... short term corrections mean nothing to me" At the end of the day the worth of something is judged by what somebody else will pay for it, and as long as the market is liquid and the mm's want a 20 odd% return on the year before they sell it out, the whole thing will continue upwards. The second half of the year is the time to get one's shorting boots on, imho. I'm saying all of the above as an old dog to whom new tricks cannot be taught. I still trade off fundamentals (with the exception of my small AOL long position) ..... and believe me, its costing me a lot of money !!!. I also think AOL is a far better company to have an investment in than a lot of the secondary networkers, chipmakers, suppliers etc .. out there. My apologies to everyone for rambling! Stephen