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: Tunica Albuginea who wrote (2772)	1/17/1999 11:46:00 AM
From: RocketMan	Read Replies (1) \| Respond to of 41369

How AOL's Latest Slipped Through the Net Crowd's Fingers By James J. Cramer 1/14/99 7:41 AM ET In the heat of battle, sometimes we forget that not all news is created equal. Take the announcement yesterday of America Online's (AOL:NYSE) alliance with Bell Atlantic (BEL:NYSE) to come up with a speedier Internet access for AOL members. For months, the naysayers against AOL have been moaning about how the cable modem will trounce AOL. Now, AOL has allied itself with the one cabal that could trounce the cable modem, the forward-thinking folks at Bell Atlantic. (As an AOL holder, I was glad to see that Amy McIntosh, an old friend from my school days, is president of Consumer Data Services for Bell Atlantic, spearheading this alliance. She gets it! This RBOC, unlike all of the others, might not screw it up!) Not only does this news amount to dipping the whole of AOL into the river Styx -- including its heel -- it also raises gross margin assumptions, as it is more efficient and cheaper for AOL to provide this service. What was the reaction from the crowd? AOL went down 9 in a cautionary Net setting. Yes, it is true that Net traders love all kinds of news. The other day, I pointed out that these folks buy on the news instead of sell on it like traditional stock traders. Strangely, though, the readers and evaluators of Net press releases often, in my opinion, reach erroneous conclusions about announcements. Some announcements are completely meaningless, amounting to no more than a phone call between companies. Others, like this AOL announcement, are actually additive to earnings. In the world that I am in, it is the latter -- announcements that impact earnings, announcements that matter. Everything else is blather. I simply don't care that some entity where membership is free just signed up more members. Heck, they could just send you a card in the mail making you a member. I care about earnings. Yesterday's announcement, the most significant one AOL has had in this most recent flurry, got dissed even though it will immediately impact earnings positively. It was a bad release day for the Net, and the Net traders were fouled by downed Web sites and caution from institutions. On another day, the stock would still be climbing from this news. The Net revolution is real. The aggregate numbers trading will rock the stock world. But that does not mean that the crowd is always right. The Net crowd has to refine what it plays and doesn't play if it wants to survive and prosper. There are three degrees of skepticism: not skeptical at all, somewhat skeptical and skeptical of everything. Most of what passes for stock market intelligentsia (Biggs, Grant, Rogers) is the latter. They don't make money. Most of the Net traders are the former. They make money now, but they could still get blown away. I am smack in the middle, exactly where I want to be, skeptical about some news and supportive of news that makes companies more profitable. Join me.