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To: Rob S. who wrote (38481)	2/6/1999 9:11:00 PM
From: Impristine	Read Replies (2) \| Respond to of 164684

rob why would you short xcit, and not @home....

To: Rob S. who wrote (38481)	2/7/1999 11:07:00 AM
From: Glenn D. Rudolph	Respond to of 164684

4 around $100 million), in addition to being paid on both customer acquisition and monthly credit card balances. First USA benefits by exclusively accessing the AOL customer base, co-branding with a recognized and highly valued consumer brand, and (importantly) exploiting and understanding the value of the Internet as a marketing, distribution, and customer service channel. The fact that First USA and AOL have been working together since 1996 reinforces the value of the deal, and should give investors lots of confidence that many of AOL's other existing partners are finding their deals to be as valuable to their businesses as First USA obviously did. Can more renewals of this magnitude and importance be far behind? As well, the Street should keep in mind that First USA is not simply buying their way onto the Internet with this $500M deal, they have been evaluating the medium for over 3 years and believe that these economics make great sense. We believe this “smart money” aspect should help move other marketers toward similar deals. Membership Has Its Privileges Finally, consumers win with this deal because it offers a tangible benefit for being an AOL consumer. As we have often said, those who think a consumer's relationship with AOL is solely based on price don't understand the intangible brand values. Now here's a deal that moves from the intangible (that your friends are there, it's easy to use, etc.) to the tangible (lower rates than other cards and service tailored to your needs). When Ted Leonsis spoke at our annual Internet dinner in December, he alluded to these kinds of leveraged deals for subscribers in the future (special hotel rates, ticket deals, etc.) Like any club or group with substantial size (AAA, AARP, etc.) AOL will be able to leverage its size in a way that benefits both its members and its bottom line. We just happen to think the Internet adds lots more firepower to this captive customer base than any other out there. Why We Like This Deal So Much This deal demonstrates AOL's ability to leverage its key corporate assets: the brand and the subscriber base. Furthermore, it gives a strong indication of management's ability to monetize those assets over time. The original Tel-Save deal two years ago was $100M, today's First USA deal is $500M; these deals will only increase in value over time as more time allows the subscriber base and the value of the brand to grow. Never Underestimate What This Subscriber Base Is Worth As we say repeatedly, investors should never underestimate what a consumer audience of this size is worth. AOL will be able to monetize their 35 million subscribers (15 million accounts) in ways that we are just now beginning to realize and if someone would have told us two years ago (when the $100 million Tel-Save deal was announced) that AOL would sign a $500 million deal, we would have chuckled at their optimism. Of course, AOL will continue to strike other such agreements that have the increasingly valuable AOL subscriber base as their fulcrum. Depth Gains Nicely On Breadth (And Is Accretive To Boot) For regular readers of The Internet Capitalist, our thesis that advertisers and shareholders are coming to rely on both axes of the consumer marketing game (breadth and depth) should be familiar. And thanks to the $3.6 billion Yahoo!/GeoCities merger announced last week, we have another data point toward our thesis. Our writings in the past have revolved around the idea that something other than plain reach was responsible for the market cap and advertisers differences between a Yahoo! and, say, a Lycos, who has, roughly, a similar market cap. Indeed, this statement is supported by corroborating evidence that advertisers are getting increasingly impatient with .5% click-