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To: Mark Fowler who wrote (46962)	3/23/1999 2:36:00 PM
From: Glenn D. Rudolph	Read Replies (1) \| Respond to of 164685

4 currently defined opportunities)? Well, we think we might have an early clue. We believe this next phase of AOL's development, which we dub “the third wave” is as important as the Internet advertising opportunity AOL went through in 96/97 (phase one: the content phase) and as important as the Internet commerce phase AOL went through in 97/98 (phase two: the commerce phase). If you thought those two revenue opportunities were impressive, they could pale in comparison to the third: Internet Communications (that is, IP communications). Remember that AOL's ability to “direct” their consumers to a certain advertising message (for which they get paid) generated a good portion of their shareholder value throughout 1996 and 1997. Remember too, that AOL's ability to “direct” their consumers' to a certain transaction then took the Street's imagination (and AOL's market cap) to even higher levels in 97/98. We think AOL's ability to “direct” their consumers' IP communications traffic (in a voice-over-IP world) is the third and perhaps most important emerging opportunity we've come across in the many years we've been watching this name. We'll Have Much More To Say About The Third Wave In An Upcoming Report At each of our meetings, we presented this concept to management, with unanimous agreement among them that AOL stands to benefit enormously from “owning” the IP communications stream of 40 million consumers today and the 50? 60? million in two years when voice over IP becomes a reality. We suspect that folks like WorldCom, Quest, the RBOCs, etc will be scrambling to transom as much traffic over their fixed cost infrastructure as possible, and in a voice-over IP world, AOL will be able to direct traffic just like they direct consumers' attention spans (content) and direct consumers' wallets (commerce). Though we'll have much more to say in an upcoming report on the subject, we think that AOL's market cap today could look like a great entry point if they are able to execute against this opportunity. We'd Be All Over The Stock At These Levels Business looks great, the only material overhang on the stock (the broadband “threat”) looks like it will be passing out of the Street's collective conscience soon (with each passing DSL deal and the likelihood that AOL will be able to strike a cable deal sooner rather than later on terms that make sense to them), and we've got an early eye on what could be a huge new revenue stream for AOL in the form of their next “disintermediation”: Internet communications, the Third Wave. We're aggressively reiterating our Strong Buy rating this morning. We've Seen The Future…It Is DoubleClick We upgraded DoubleClick on Thursday last week and thought we would include the rationale for that upgrade in The Internet Capitalist. Since we don't give out the Strong Buy rating with much frequency in our space, we wanted to provide the (somewhat) lengthy explanation in this forum, hoping that our enthusiasm is backed by sound judgment and due diligence. After digesting a series of announcements from DoubleClick, speaking extensively to advertisers, agencies and Web publishers, and meeting with management in a series of meetings over the last month, we've come away with much more confidence that DoubleClick is well on their way to establishing themselves as the leading Internet advertising services company out there, with a great technology (DART), a huge first mover advantage, a critical mass of advertisers and Web publishers, and some great new products that are well timed to take advantage of the most important trend in Internet advertising today: targeting. The Network, DART/Closed Loop, And Targeting Are Why We're Upgrading