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

To: Robert Lawkins who wrote (9674)	4/29/1998 9:06:00 PM
From: Jason Cogan	Read Replies (1) \| Respond to of 13594

Robert and others: <<I love ML but this report was a real hype job.>> My brother works at Merrill Lynch, but this report still makes me sick. I read the report today after he faxed it over, and I think it's criminal the way analysts provide price targets without even a hint of fundamental analysis. The report practically says AOL is the internet. Nowhere does the report mention anything about silly things like competition, true negative earnings, questionable accounting, or the one-time charge game. I'm almost amazed that ML lets this go out with the Merrill name, but then I remember ML's true reason for living. WHO CARES ABOUT THE TRUTH?? WE'RE JUST HERE TO SELL SECURITIES. What really amazes me is that portfolio managers, who apparently know this rule as well as the next guy, still buy the securities after the upgrade. Don't they bother to read the report, or is the mere issuance good enough for them? The report basically extrapolates subscriber growth, slows expenses according to AOL's criminal accounting, and still prices at 75X projected earnings in 3 full years!! Maybe it's better to throw all rational thinking out and just behave like the next idiot. What would Warren Buffet say at a situation like this? Regards, Jason Cogan

To: Robert Lawkins who wrote (9674)	4/29/1998 9:18:00 PM
From: jack rand	Read Replies (1) \| Respond to of 13594

As reported by AOL average per sub for Q2 was $17.44 access and $2.33 ad-commerce = $19.77+$2 price increase=$21.77. So, MER is saying that, ex another price increase, ad-commerce will grow 300% (4x)

To: Robert Lawkins who wrote (9674)	4/30/1998 12:16:00 AM
From: Tim Kenney	Read Replies (1) \| Respond to of 13594

>No misprint, 75x 2001E. Straight out of the report. 18.2 million members by 1999,< Can someone out there help me on this. I was on a long plane ride recently and I tried to figure out what AOL's sub potential is in the US. First, how many households are there in the US? I think it is about 80 million, but I am not sure. Now, how many get cable TV? I love the web, but if you had the choice of getting cable TV or the web, which would you choose? I really don't think that the web is anywhere close to replacing cable TV as an entertainment medium. Anyway, what percent of US households subscribe to cable or sat TV? I'll say it is 30-40%, but that is probably high given the number of people out there in very rural areas. Anyway, at 30-40% I get 24 to 32 million potential US subscribers in the intermediate term. (My guess is that again is an overestimate when you consider that many people get the web at work, and will not bother to subscribe at home for something they get for free from 8-6.) So, if the intermediate term "saturation" is 24 to 32 million, how many of these can AOL be expected to get and hold? 50%? At 50%, which is awfully generous, you get US subscriber potential of 12 to 16 million. Yes, I know, I have neglected to add in international subscribers. That is where Bertelsman does the marketing and probably collects the bulk of the revenue, but AOL gets to count the subs. Big fudge potential if I ever did see it. Regardless, the ad and commerce potential is not as great. I cannot see American merchants paying that much for foreign eyeballs until we start to see the likes of Coca-Cola getting into the web advertising game. So, where is AOL's future growth. Charging much more for advertising or e-commerce to serve a 12 to 16 million person base. Oh, don't get me wrong. I am sure that AOL will continue to rack up subscriber gains, but I am questioning whether anything above 16 million US subscribers could be possible. I say not for at least another 5 years.