I have been a long-term AOL bull, I've sold hardly a share in the past few years, it's my biggest single holding, but that just might be about to change--despite the company's past abilities to surprise the skeptics. Become a Complete Fool
This is one time when the analysts actually may be right. AOL has indeed made a botch of broadband efforts. It's a Vision Thing, not enough of the V stuff compared to the past. AOL's broadband efforts have lagged compared to rivals', and now the company appears to be too bypassable ala Excite@Home, even though the situation is far from as dire. See the ZDNet link below. I would have expected AOL to be much bigger in DSL, via alliances with phone companies and others, than it is now. And of course the Comcast/AT&T cable deal, encouraged by Microsoft, isn't the best news even though I realize that a successful bid would have meant even more debt.
Worse, the people who've startled the critics are no longer as influential at AOL as before. I can understand Steve Case being overwhelmed by his brother's tragedy, I find his sense of family duty to be admirable, I do not think he's a crook, I resent all those toxic postings about him, but he's let the TWX folks set the tone with more of an interest in litigation than innovation. A media company should be like a good moviemaker or novelist. It should keep surprising us in positive and meaningful ways. Instead we get more of the same--the shameful decline of Netscape, the continued use of a third-rate email client, and insufficient ability to forge effective alliances with hardware makers beyond the traditional effort such as those famous icons on the desktops. Harp all you want about the advertising slowdown, but that won't give us a full-powered Netscape or get AOL back on track in broadband or the related area of net.movies.
To see what AOL should be doing, visit the Intertainer site and notice how it's pushing all kinds of hardware products so people can enjoy Net-delivered movies. AOL could do this much better than Intertainer by renting its brand name to hardware companies and promoting it all in a massive advertising campaign in AOL-owned media. The Gateway deal involving Internet appliances didn't go far, but maybe that's because AOL rode the wrong horse. What if AOL hadn't been so sleepy and had gotten the broadband connections going in a big way and offered consumers a truly one-stop approach: a hookup, the right hardware, traditional AOL services AND the old Time Warner collection of movies? Suppose the biggies actually had the vision to take care to the details--for example, working with the phone companies to expand the supply of broadband-ready techies? What if the vision had existed for a truly integrated approach? Oh, the what-ifs!
So why have I hung in there, beyond knowing that the ad depression has hit everyone, not just AOL Time Warner, which anyway benefits from subscriptions? Well, beyond the broadband and convergence stories, I've believed in The Library and the other stellar content. But even "Sex in the City" and Harry Potter and the wonderful old classics in the vaults can't compensate for the company's frequent bungling in broadband and other areas.
Far from making me feel better about the company, the January 7 conference call made me feel worse. Bob Pittman, actually one of the better, more visionary folks at the top, let me down big with the following excuse: "Broadband is being gradually adopted as an add-on connection service for experienced narrowband users. It's not a separate market and does not attract newbies. The target user is someone who is already online." Huh? Which company out there already has tens of millions of narrowband users who've been online for year? What malarkey. Pittman talks of converting the existing customers to broadband, but I don't see that happening as quickly as we'd hoped.
Are any AOL execs or peons--yes, I know you read this board--willing to defend the company or at least share their views with me privately? Email me at email@example.com or firstname.lastname@example.org, and please note the second domain name. One more example of how AOL has let me down mightily. From Yahoo Groups to the wonderful financial news portal, Yahoo is much more a part of my cyberlife, because AOL has been too fixated on net.novices (not that I'm holding out Yahoo as the ideal stock, either).
But enough of that. Rather than sell when the economy improves and AOL is back in the upper 20s or lower 30s, I'm still open to being persuaded with relevant and substantive replies to the points I've made here. Just please don't give me any subscription growth figures or revenue or earnings stats. History. I know the story. Instead I want detailed assurances about What Will Be, not What Has Been. And predictions aren't enough. I want reasons for these predictions.
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I have been a long-term AOL bull, I've sold hardly a share in the past few years, it's my biggest single holding, but that just might be about to change--despite the company's past abilities to surprise the skeptics.
Become a Complete Fool