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: tang who wrote (6593)	3/13/1999 8:23:00 PM
From: tang	Read Replies (3) \| Respond to of 41369

AOL growth rate of membership may not be x2 every year but AOL's advertisement and e-commerce growth rate may be x3 or x4 for the next 3-5 years and that is what AOL is focusing on. AOL wants to have high % of its revenue from e-commerce and adv., low % are from the membership fee. AOL wants to lay the eyeball foundation as big as it can get, AOL wants the largest internet market shares in the world as soon as it can get through compuserve, icp, netcenter, and through alliance in ASIA, Europe, South America ... If I want to achieve the largest exposure through my internet ads $, who should I consider? AOL, of course, why? because it has the largest eyeball audience! That is why FirstUSA renewed its partnership with AOL lately for $500 millions. Do I worry AOL's membership growth rate? Not really, why? because AOL's management is a smart bunch, they just sent a second layer of CDs from compuserve lately to carpet my neighborhood, I haven't received anyone else's, I like that attitude very much, because AOL still acts like a small business, very alert! very aware of other's attack! The management acts like a bunch of young and hungry people, I like that! because only hungry people will act aggressively in seeking food! Only young people has never ending dream! AOL has the muscle, AOL has the eyeball counts, AOL has the money, but AOL still acts like a small business! The day AOL acts like MSFT, ATT, IBM, is the day I should bail out! ------ Previous

To: tang who wrote (6593)	3/14/1999 8:19:00 AM
From: robert duke	Respond to of 41369

Isn't life grand!

To: tang who wrote (6593)	3/14/1999 10:49:00 AM
From: Steve Robinett	Read Replies (2) \| Respond to of 41369

tang, You assert, AOL's growth rate of membership may not be x2 every year but AOL's advertisement and e-commerce growth rate may be x3 or x4 for the next 3-5 years and that is what AOL is focusing on. This idea has been discussed here for years, the so-called leverage the subscriber base argument. The problem with it is that there is no evidence to support the proposition. Advertising and e-commerce revenues grow at between 16% and 19% of total revenues, depending on the quarter (There's some seasonality to the Ad & e-com revs; the most recent quarter showed about 18.5% of total revenues from Ad & e-commerce, the same percent as a year ago when AOL had half the subscribers it does now.) Ad and e-commerce revenues as a percentage of total revenues have so far grown year after year in a linear manner. That means the only way you get AOL to grow is add members. It is true that margins on ad & e-commerce revenues are huge and margins on subscriber fees minuscule, so adding a dollar of ad or e-commerce revenue is worth a lot more than adding subscriber fees, meaning AOL's cash flow will improve dramatically as it grows its subscriber base but, again, the evidence so far shows AOL can only grow advertising and e-commerce proportionally with growing its subscriber base. Check it out for yourself. Start by reading a financial report from the company. Best, --Steve