It is not surprising that AOL is having troubles keeping up with an expoding market.
But their achievements are impressive. They are the only internet play with reliable revenue from 3 sources, 1) subscription, 2) advertising, and 3) commerce.
They have demonstrated an ability to execute when challenges are presented 1) correcting the "busy" signal in approx 3 months, 2) attempting to address the Kiddie porn scrare proactively, 3) good management of wall street expections regarding performance, and more.
They are positioned to take advantage of a consolidating on-line market (cash & bigness count). 10 million suscribers today (pre compuserve acquision) and growing rapidly. Next largest, Microsoft & GeoCities w/2.5 million & 1.5 million respectively. 50+ ISP w/100,000+ suscribers. A maturing market can handle, perhaps 10-15 participants. Who is positioned to "purchase" the customers. I would argue its AOL.
Finally, they are position to be the "Sears" or "MasterCard" provider to the middle market. Concerns about Internet commerce such as "stealing" credit card numbers, quality of merchants/merchandise, etc can be reduced by AOL's achievement in creating an Internet "brand" By itself, this is quite an achievement.
And.....they have managed the expense-side of the businiess quite nicely. Obviously, in an exploding marketplace, plans are adjusted and shifted quickly. To do this and hold onto your cost structure is quite impressive indeed.
I believe AOL is a long term solid player and the stock will continue to outperform the market.