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

To: wiley murray who wrote (11370)	10/6/1998 3:36:00 PM
From: Dell-icious	Respond to of 13594

Gary B. Smith of thestreet.com likes AOL. Here is an excerpt from why he picked AOL as his one stock pick during the TSC summit last weekend: Gary B. Smith, America Online (AOL:NYSE) For the small part of my portfolio that is not long traded, I try to look for the highest growth industry out there, and I think it's the Internet. In our own house, [we have] seven PCs and laptops, all connected to the Internet somehow. In the high-growth industry, I look for the company that's the closest thing to a monopoly. AOL is a monopoly. I'll tell you why. Who can leave? People live at AOL, or any other service provider, AOL happens to be the biggest. But you have their Internet address. I give my 11-year-old daughter an AOL address. If I take that address away or move it, she kills me. That's it. People live there. When you couldn't get on six months ago, how many people left AOL? Two? They complain, they bitch, they moan, but two people left. They said I can't get on, but no one went to anyone else. Second reason: They already defeated the biggest bully out there. They beat Microsoft (MSFT:Nasdaq). How many people can claim they beat Microsoft? None. Maybe a few niche companies here and there. Next reason: Let me as a technician stipulate that there is no relationship between earnings growth and revenues, P/E and stock price. If there is, it's accidental. Maybe over the long term, yes. But if there was, none of these value people would be talking about value stocks. They'd all be in line. They'd say it's reasonably valued. Instead they're saying it's such a great story, but it's low-priced. We should buy it in the hopes that it will go up. That leads me to my next point: My style of investing and trading -- quite frankly -- is not dissimilar in that, in the stock pick that Craig had, is that I buy winners. I would rather bank on a Mark McGwire having another 50, 60, 70 home runs next year than banking on some single-A ballplayer breaking into the Yankees and hitting 30 homeruns. AOL's a winner. They're going to be a winner. Everyone's saying, let me find that diamond in the rough. Herb Greenberg: Wait a minute, you're not long it, right? Gary B. Smith: No, but that's only because as a technician I was waiting for my right entry price. As a technician the chart -- AOL was dropping like crazy. AOL made a nice reversal on Friday. It was up 7 points. It rebounded, like Yahoo! (YHOO:Nasdaq), which I am not long nor would be. But I now think the time is right for AOL. It would be hard for me to imagine a year from now AOL being cheaper than it is now. They have monopoly pricing power. If they said they were going to charge you another buck an hour, or another buck a month ... Herb Greenberg: GB, what you're saying is you're talking about a great company with a great franchise that nobody's going to buy here, and you're not going to buy here. You're not going to buy here. Gary B. Smith: I will buy it in this area, that is true.