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Time Warner Inc. Message Board

  • ShortTermTrader ShortTermTrader Apr 24, 1999 11:29 PM Flag

    *Lehman: Shorts will get killed again!

    This report was released on Thursday... look for
    those 20+ daily point gains next week :)

    -- SL:
    America Online: Expect Another Strong Quarter
    --
    Lehman Brothers (Brian Oakes (212)526-xxxx) AOL

    Ticker : AOL Rank(Old): 1-Buy Rank(New): 1-Buy

    Price : $142 3/4 52wk Range: $176-17 Price Target
    (Old):$100
    Today's Date : 04/22/99 Price Target
    (New):$100
    Fiscal Year : JUN

    ( EPS Table
    deleted due to length restrictions)

    Price (As of
    4/21): $142 3/4 Revenue (1999): 3.8 Bil.
    Return On
    Equity (99): 30.3 % Proj. 5yr EPS Grth: 50.0 %

    Shares Outstanding: 1120.0 Mil. Dividend Yield: N/A

    Mkt Capitalization: 144.13 Bil. P/E 1999; 2000 :
    357.5 X; 214.5 X
    Current Book Value: $1.08 /sh
    Convertible: YES
    Debt-to-Capital: 23.6 % Disclosure(s): G

    ------------------------------------------------------------------------------
    * We expect another strong quarter from
    America Online when it reports
    earnings on April 27
    after the close. We expect the company to slightly

    exceed our EPS estimate of $0.10 (for America Online
    standalone, excluding
    Netscape).

    * The key
    surprises should be subscriber growth of 1.7-1.8 million,
    higher
    gross margins, and a backlog of advertising
    in excess of $1 billion. After
    the report, we
    believe Street estimates should move higher.

    *
    This quarter will include the Netscape acquisition;
    thus, reported revenues
    should easily exceed our
    $1.025 billion estimate. Revenues from advertising

    and e-commerce should exceed our $181 million
    estimate.

    * We believe the strong subscriber
    growth is a result of an increase in users
    coming
    online, coupled with the company's increased market share
    and lower
    churn rates, possibly indicating a new
    level of growth.

    * Lastly, after the close,
    Sprint Corporation (FON - 105 3/8; rated 1) filed
    to
    register the 28.8 million shares of America Online it
    owns, which could
    overhang the stock. We would use
    this as a buying opportunity into next
    week's
    earnings report.

    ------------------------------------------------------------------------------
    BUSINESS DESCRIPTION: America Online is the
    largest and fastest-growing
    online service company in
    the world, capturing millions of consumers looking

    to experience the online and Internet worlds.

    ------------------------------------------------------------------------------
    First Call Corporation - all rights reserved.


    END OF NOTE

    Symbols:
    US;AMER
    US;AOL
    Source FC - First Call
    Categories:

    BKR/SL FCIN/PRTPUB FCIN/COMPUT FCIN/DATAPR FCSU/PRC
    GEO/US GEO/NME


    -- ShortTermTrader

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • I understand that Sprint has filed to sell their 28.8 million shares of AOL, my question is when are they to be sold? Sometime this week? Please help, when????

      • 3 Replies to Christy_Canyon99
      • Shares will hit the market late in 1999. The
        geniuses at Sprint created a hedge with Goldman that will
        limit their gains to approximately $4 per share. They
        left over $4 billion on the table. Smart, huh?

      • Its very simple, Sprint, Paul Allen(microsoft)
        and a couple of others have filed to sell shares of
        AOL. The only one of these that would make a
        difference is Sprint's shares. In accordance with a
        partnership AOL and Sprint had in the early going, AOL gave
        sprint warrants for stock. These shares are already
        counted as if they are outstanding, therefore they do not
        dilute earnings. Sprint didn't think AOL would do well
        so instead of taking a chance sprint entered into a
        hedging transaction with JP Morgan. In accordance with
        the agreement the shares will be sold to JP Morgan
        for 90 million in November even though their true
        value is in the billions. Now JP Morgan already has a
        large stake in AOL, so its in their interest to keep
        AOL's price high. That doesnt mean they wont sell a few
        shares ; they will sell some. But it wont have any major
        effect.

      • sometime in November, and not all at once. It will be done gradually. Did you ever go out on margin for these earnings????
        Good luck this week, should be big.

    • i have approx. 15,000 in cash, im interested in
      buying seven stocks with an approximate worth of
      21,000..(3000 each)..will use a margin account to do this.2 of
      the stocks have a required maintenance of 50%, 5 have
      maintenance of 65%...
      1) will they let me do this
      2)
      what is the maintenance requirement
      please help,
      would like to diversify but am having trouble figuring
      this one out

 
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