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Technology Stocks : AUTOHOME, Inc -- Ignore unavailable to you. Want to Upgrade?

To: FIRENZA who wrote (6191)	3/12/1999 12:30:00 AM
From: Manish Aurora	Respond to of 29970

I believe there are 3 issues here. 1 Can AOL compete on the basis of access bandwidth 2 Does it need to? 3 Even if it can, is it a better bet than ATHM? 1 Probably. Will most people notice or care for the difference between 1.5 MB and 10 MB today? No, in 2, 3 years with streaming media? Yes. But that is 2 years away. 1.5 MB is much better than 56K. They will lose customers to ATHM, but that will depend on packaging / marketing of cable+ modem vs. phone+modem. 2 Only to some extent. They have built a community so their business will not wither away. Can they continue to grow at the current pace? Probably not, too much competition popping up. 3 AOL and ATHM are different investments. AOL is overpriced by any measure, because it has saturated this country and cannot increase cash flows at the same pace going forward. It has to replace its ISP business growth with e-commerce growth. ATHM+Excite is far smaller, but in many ways becoming similar to AOL. However, given smaller size, it can grow longer. Many people are buying AOL for its sheer size and momentum, a bad reason to buy a stock. ATHM carries a delivery risk, but not a price risk, because it has to run very hard to keep up growth but the stock is fairly priced given current growth numbers. If it slows unexpectedly, though, the stock will be hit very hard because there is no room for error. Manish Aurora www.rationalinvesting.com