UKNM: AOL did well - what value internet stock?

[Ray Taylor]

"For the first time, magic money is being used to buy real assets, and on a grand scale. The real significance of the $335bn merger of America Online and Time Warner is that AOL is using its internet currency to purchase a vast collection of media and entertainment assets - from Bugs Bunny to CNN - that generate real cash and real earnings." Lex 


Lex, FT, Jan 11 2000 - http://www.ft.com/hippocampus/q31e636.htm


What can I add? Suffice it to say that, whereas most people have been saying for a long time that Internet stock is overvalued, AOL has demonstrated that in their case at least, valuations have been conservative enough. Of course that does not mean that most internet stock is not over-valued, but it should be borne in mind that real asset value can be bought with funny munny. 


So the moral of the story is - some internet stock may be _undervalued_, however much it may appear to be overvalued.


But in my view much internet stock _is_ overvalued, mostly because the company does not understand well enough how to build real value. 


Ray Taylor



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