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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Robert Rose who wrote (11827)	4/22/1999 10:03:00 PM
From: Daniel Joo	Read Replies (1) \| Respond to of 99985

Rob, looks like you may be right but YHOO hardly budged on earnings and neither has GNET. Normally, these stocks will sky rocket after stronger than expected and stock split news... hence my position that we are losing steam. Still watching interest rates... Dan

To: Robert Rose who wrote (11827)	4/22/1999 10:17:00 PM
From: Daniel Joo	Read Replies (1) \| Respond to of 99985

Rob, an interesting article on AOL. In addition, to Tribune Co.'s hedging of AOL stock, this is another sign that other big players are hedging their bets. Sprint sure made a wise investment. Notice Paul Allen registering his shares to be sold. Sprint to get $90 million for AOL shares By Reuters Special to CNET News.com April 22, 1999, 4:30 p.m. PT update WASHINGTON--Sprint will get about $90 million for 28.8 million shares of America Online that now are worth almost $4.3 billion. Sprint received a warrant in 1993 to buy the AOL shares for a split-adjusted price of about 49 cents each. The U.S. long-distance phone company, though, entered a hedging transaction in 1995 that capped its gain at about $90 million, Sprint officials said. Its shares had risen to more than 31 times their price at the end of 1995, when AOL's prospects for becoming a dominant force in the explosive growth of the Internet was far less certain. "Back in 1995, it was by far the most prudent thing to do, and a lot of other investors did the same thing," said Sprint spokesman Bill White. Since then, AOL has grown apace with the surging Internet industry of the late 1990s. AOL's revenue has risen to $2.6 billion, with a $92 million profit, in its fiscal year ended last June, from $394.3 million of revenue--with a $35.8 million loss--in the fiscal year ended June 1995. Sprint shares fell .94 to 104.44. Still, the shares have risen 24 percent so far this year. Sprint's disposition of the stake, planned years ago, doesn't reflect its current outlook for AOL, White said. "We have had a long and prosperous relationship with AOL," he said. Sprint exercised its warrant last month and took delivery of the 28.8 million shares, Sprint officials said. AOL filed with the U.S. Securities and Exchange Commission yesterday to register Sprint's stock so the phone company can liquidate its stake. Sprint "informed us that it plans to sell or otherwise dispose of all of the shares it owns," AOL said in the SEC filing. White said Sprint can sell or transfer the stock in a number of ways to settle its 1995 hedge, which it transacted with J.P. Morgan. A J.P. Morgan spokesman declined to comment. Sprint took the 1993 warrant from AOL as partial payment for telecommunications services, providing customers with access to AOL. The two companies still have a similar service arrangement, AOL and Sprint officials said. Under terms of the 1993 warrant, Sprint received the right to buy 450,000 shares of AOL for $31.25 each. AOL stock has undergone six 2-for-1 splits since then--transforming Sprint's warrant into a right to buy 28.8 million shares for about 49 cents apiece. Aside from Sprint's stake, AOL's S-3 filing registered another 2.2 million shares for other investors, giving them a chance to sell. Some of the shareholders include Barry Diller, the media mogul who runs USA Network, with 20,980 shares; a Bear, Stearns affiliate with 339,968 shares; 45,756 shares for the Washington Post Company; and 269,188 for Microsoft cofounder Paul Allen's investment company, Vulcan Ventures, according to the filing. Copyright 1999, Bloomberg L.P. All Rights Reserved.