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: MoonBrother who wrote (12375)	4/22/1999 8:42:00 PM
From: Robert Brooks	Respond to of 41369

Considering the price Sprint will receive for its 28.8 million shares, I doubt it will affect AOL's price much. 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.