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

To: Raymond who wrote (10888)	8/3/1998 2:37:00 AM
From: FACTUAL	Respond to of 13594

But surely any prospective buyer would value AOL at some multiple of subscriber revenue? Valuation due to annual derivative revenues would also trade at a multiple. Assuming that the same multiple is applied to both revenue streams and assuming that this multiple is 5 ( for illustrative purposes only, try this with whatever multiple makes you comfortable) then the value per subscriber of derivative revenues is $ 80 ( 1700/5=340: 340-260 ( subscriber revenue)=80). This appears to be a fair value to me ( but have no expertise in valuing these kind of subscribers). There is tremendous upside potential as subscriber base increases slower than depreciation as well as the tax advantaged sunk marketing costs increase subscriber revenue sustainability. It is a debatable subject. Would appreciate discussion of any alternative method of valuing AOL.