Poor America Online. Relegated to second-class citizenship in the Time Warner corporate structure, cast aside by its parents to seek its own identity, its ticker symbol even stripped away -- does anybody remember when this company was one of the greatest growth stories of the '90s? Bold enough to actually buy out an old-world entertainment giant?
Chances are David Gardner does. AOL performed well as one of his early picks in the old Fool Portfolio and then the Rule Breaker Portfolio. David is always looking for those 10 baggers. And starting later this month he'll be doing so in a brand-new newsletter devoted to growth companies. Be the first to know about it as soon as it launches.
In today's Motley Fool Take:
- AOL Goes Back to the Future
- Discussion Board of the Day: Guns
- Trash Your Xerox
- Quote of Note
- Mobile TV Is Coming
- More on Fool.com Today
AOL Goes Back to the Future
There's a song by a band I definitely don't listen to that goes, "Don't stop thinking about tomorrow," but the lyrics rather tellingly continue, "Yesterday's gone, yesterday's gone." Apparently Time Warner's
According to CNET, AOL's plans include heavier customization than is available now, Web search (compliments of Google
None of this is surprising, given the remarkable resurgence of Internet advertising and recent data showing that online ads, while hated, do indeed work. So AOL's move is not exactly illogical in terms of getting in on ad bucks. But it might be a bit misguided if it's meant to lure more traffic, unless AOL has some nifty tricks up its sleeve to make its site more alluring than the rest.
Portals are a hot topic. In fact, several of our Foolish writers recently kicked around the idea of whether or not Google should become a portal. Regardless, Google has stayed true to its core mission of specializing in search and information while providing email, news, foreign language converters, Froogle, and targeted search, to name a few, and not to mention the list of ideas incubating in Google Labs.
If AOL does expand this initiative beyond its gated community in an attempt to cast a wide net over Internet users, we all know it's not just Google that AOL would be contending with but also Yahoo!
When it comes to AOL, will it be better than before, as the song lyric goes? I'm not going to say that it can't work, and a snazzier, more useful interface with relevant content could well help stanch subscriber defections. First off, though, AOL seems a little late to the portal party.
However, when it comes to a search for new community sign-ups, I think AOL's going to have to get more futuristic and original when it comes to envisioning new ways to lure Web surfers; it would be getting into the fray with a few rivals who are doing what they do best.
Here's more on related issues:
- Google should be a portal, too. Flip side: heck no!
- Can AOL lure the non-AOL, broadband set?
- AOL uses content as surfer bait.
Alyce Lomax does not own shares of any of the companies mentioned, nor does she listen to Fleetwood Mac.
Discussion Board of the Day: Guns
What do you think about the expired assault weapons ban? Share your views with other Fools on our Guns for Sport and Protection discussion board.
Trash Your Xerox
If there were a contest for world's worst corporate slogan, "Technology/Document Management/Consulting Services" would definitely make the top 10. It's on my short list for the medal round.
Yet that's exactly the addled specimen of dysfunctional groupthink on which Xerox
Here's a quick quiz for you. How rich would you be if you'd purchased 1,000 shares of Xerox in 1970 and held them until today? Does this chart answer your question? (Answer for those too lazy to click: Less rich than before.) Yes, the company was a 20-bagger from the low in '91 to the high in '99, but since then, it has shed 88% of its value.
How does a company with a name that is synonymous with duplication technology squander that kind of capital and come a cropper? One answer is that its products and services became a commodity, replicable by any number of companies. And nothing has changed today. Printers? How about Lexmark
Ask yourself, what does Xerox do that two dozen other companies can't do? The answer is, not much. That's why last quarter's numbers don't look so great to me. Revenues were down 2% before the 2% gain in currency exchange. That's minus 4% to you and me. Gross margins slipped 1% even with that forex benefit. Profits? Please. They came through expenses, which is nice, but that goes only so far. Finally, it's tough to be enthusiastic about a self-described tech company that cut research and development expenses by 17%.
Cash flow looks OK, but what of it? If things are so peachy, why the need for borrowing twice the free cash flow for "general corporate purposes"? Yes, it looks like a bargain to some Fools, but given management's propensity to put lipstick on pigs, I remain a skeptic. If I held it, I'd be ready to drop it on any sign of weakness, and this tag line sure looks like strike three.
My pick for Xerox's new slogan?
How about: The Dorkument Company? Sorry, that's just mean. Make it: Just another document company.
Doesn't do much for the ear, but it's getting closer to reality, and investors should keep that in mind.
Quote of Note
"He that would make his own liberty secure must guard even his enemy from oppression. For if he violates this duty, he establishes a precedent that will reach to himself." -- Thomas Paine, patriot and political philosopher
Mobile TV Is Coming
As if people driving and talking on their cell phones were not enough of a hazard, a consortium of cellular companies wants to develop standards to deliver video to your handset. Great. Now we can have a nation of distracted drivers who are talking on their phones while watching TV.
Under the aegis of the Open Mobile Alliance, five of the world's top cell phone manufacturers will collaborate on the mobile-broadcast specifications. Nokia
It would not be the first foray into mobile TV. Sprint
Mobile TV is not such a sure thing, though, even with the industry heavyweights the alliance has behind it. For instance, it is unclear whether people will want to watch their local football franchise on a tiny screen (being a Giants fan, it's hard enough to watch them at the stadium, let alone on a very small screen. But I digress.). There are also issues such as battery life, audio quality (90% of mobile phones don't offer stereo sound), and size. These are phones, after all, and generally you want to be able to slip them into your pocket or clip them to your belt.
The reason the companies want to try, even if they need to invest hundreds of millions of dollars to improve their technology, is because of the potential boon the mobile information/entertainment market represents. According to wireless consulting and research firm Alexander Resources, the mobile "infotainment" market will be a $7.2 billion industry by 2008.
Japan and South Korea already have mobile TV service, and it's expected that by the end of 2005 it will be available in Europe.
Undoubtedly people will be willing to pay to have streaming video on the cell phones. Heck, they pay to download ring tones to their phone. Yet, as with many things in life, just because we can do something doesn't necessarily mean we should.
Distracted drivers already are a major cause of accidents on the nation's highways. The New England Journal of Medicine found cell phones contributed to a quadrupled risk of collision. Adding reruns of Friends to the mix can only worsen the situation.
Still, the potential for the technology brings new meaning to the phrase "I want my MTV!"
Fool contributor Rich Duprey long ago found MTV to be unwatchable. He does not own any of the stocks mentioned in this article.
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