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Technology Stocks : America On-Line (AOL) -- Ignore unavailable to you. Want to Upgrade?

To: Dennis who wrote (80)	12/29/1998 9:01:00 AM
From: Apache Indian	Read Replies (3) \| Respond to of 41369

Read this message posted on Yahoo by an average AOL fool !!! ------------------------------------------------------------------ You say that AOL is trading at 200 X next year's earnings. Here are several reasons why that comment is illogical, irrelevant, and generally dumb... 1. No one knows what next year's earnings are, hence the word "next". 2. Today's price (157) divided by analyst's earnings estimates for year 00 (.86) is about 186 - not 200. 3. If AOL split in price 3-to-1, then at 52 it would only be trading at about 62 times earnings estimates, but it would be the same company and same stock. IE: comparing earnings estimates to stock price is irrelevant. If you want to compare something, compare total market capital to projected revenue... Earnings are also a bad thing to compare because some companies don't have earnings! And, as earnings get close to 0, ratios skyrocket - drastically skewing the result.