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

To: Jules B. Garfunkel who wrote (11428)	10/12/1998 3:05:00 PM
From: Steve Robinett	Read Replies (1) \| Respond to of 13594

Jules, 1) We agree AOL probably won't be bought out. 2) Here's the cover letter with AOL's proxy that discusses a 2:1 split. sec.gov 3) On your $.02/share per quarter ($.08/year) earnings hit due to the accounting changes forced on AOL by the SEC, I would agree completely that $.08 would have an eventual impact if we were talking about a mature company in a stable industry. The reason AOL is priced so far ahead of its earnings is obviously the company's perceived prospects for the future--the Internet is growing rapidly and so will AOL, blah, blah, blah. I would suggest that what's more important in understanding people's mindless rush into AOL is revenue growth--that is, subscriber and e-commerce growth. That revenue growth rate has been discounted into the stock price on the assumption that earnings will follow. If something ultimately pounds AOL's stock back to reality, it will be a slackening in revenue growth, not just an accounting change worth $.02 a quarter. Best, --Steve