Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Waldo Rood who wrote (2387)	1/11/1999 9:39:00 PM
From: freeus	Read Replies (1) \| Respond to of 41369

You bet. You are welcome Friday, Jan 8th, 1999 IBD Title: Top managers try to decide if highfliers have more legs "What would you do if your Internet stock went from the low teens to more than 300 in one year, split, and then resumed its upward march? Would you sell, or buy more or hold? There is no easy answer to this question. It would seem rational that the stock cant go much higher any time soon. But then the Internet stocks long ago stopped acting according to any rational manner of thought. "This is the same thorny problem facing the managers of some of the top performing mutual funds in the country. They must decide whether their big winners in 1998 will help or hurt the fund in 1999. Scott Schoelzel, manager of $16 billion Janus Twenty, up 74% in 1998, latched on to America On Line early in 1997 and made it his top holding. He enjoyed the stock's wild ride in 1998 but now faces the same decision confronting many investors: buy sell or hold? IBD: So what's going to happen to AOL next year, Scott? Schoelzel: Oddly enough, I just hung up the phone with the head of AOL and I asked him the same thing. IBD:What did he say? Schoelzel: Well, he said the speculation that AT&T is going to buy AOL is wrong. It's not going to happen, not as long as AOL has an $80 billion market capitalization. IBD: What about a partnership? Schoelzel: Partnership is the key word: Aol is the clear leader in the emerging Internet network/communications infrastructure industry, so its attractive, not as a buyout, but as a partner, for AT&T and a lot of other companies. IBD: So you plan to hold on to your AOL stake because a partnership would boost the share price? Schoelzel:That's one reason I'll hold. In 1999, particularly in the second half of the year. I think a lot of companies like AT&T and Time Warner will come to the conclusion that they cannot replicate what AOL offers, so they will form alliances with AOL. It's possible, for example, that the combined TCE/AT&T cable company will offer AOL servicdes through their cable. The opportunities for strategic deals are limitless. IBD:What would you do if AOL hit a roadblock and the stock started to slide? Schoelzel: I expect the stock to back and fill a bit, but I am comfortable that the core business is in very good shape. IBD:AOL was up 540% in 1998. It certainly cannot repeat that performance in 1999? Schoelzel:No, it cant. But there are now 15 million AOL subscribers in the U.S. and it will be 20 million later this year. The average subscriber has an annual househld income of $67,000, they are college educated, and they use the servicer for an average of 30-45 minutes per day. Most companies would kill for demographics like this. Clearly, AOL is in the early stages of its development. IBD: Could it be that expectations for AOL are unrealistic? Schoelzel: Sure, there is no read map for AOL. Its had a tremendous run, but the company's growth potential is great. IBD: Your stake in AOL, at 12%, is unusually large. Do you think its time to trim back your position, just to take profits and protect against these unrealistic expectations? Schoelzel: We started taking big positions in AOL early on, in mid-1997, when the price was low. I will buy and sell opportunistically. Were I to trim, if good aliances and partnerships were later announced, I would buy more." Freeus