AOL Time Warner, Inc. NYSE: AOL Branch: Portals

Profile:
AOL Time Warner is the biggest Internet Service Provider in the world with more than 20 million users. It is much more than a normal ISP, it is one of the most important and influential Internet companies. As an Internet stock it is one of the best performing. AOL's Internet assets are famous companies in themselves. They own CompuServe, Netscape and ICQ for example. But the biggest news came in January 2000 when AOL bought Time Warner. Shortly after that they also merged with EMI, one of the biggest music publishers in the world. This was the first really big marriage between an Internet company and a more traditional media company. The key word here is content. AOL is still making tons of money by collecting monthly access fees from its users but that could change in the future when access will be virtually free. At that point it is most important to keep users on the sites. And that is why they need content. Time Warner certainly has content but the growth rate of this company is less than AOL's growth rate. So one could argue that AOL is less of an Internet company. But we think with such a big stake in the Internet sector AOL will have a bright future.

Management:
Gerald M. Levin is CEO of AOL Time Warner after he was CEO of Time Warner. We don't know much about Jerry to be honest. We do like to mention Steve Case and Bob Pittman, both from AOL. They are the Internet visionaries. Steve Case is also chairman of the board.

Jerry looks like he is about to go into a midlife crisis. He will soon buy a Harley Davidson. Maybe he should talk to Ted Turner more......

Started: May 1985
IPO: 16 September 1996

AOL Time Warner on the Web:
main page: http://www.aol.com
investor relations: click here
current stock price: click here

Cool !

Not so cool...
  • Biggest piece of Internet property in the world, King of the Web
  • Both media and technology present in one company
  • AOL is also a huge communications medium
  • Media and Internet people are a different breed, working together could be diificult
  • AOL will not have Internet growth rates
  • Market power could stifle innovation or competition (where did we hear this before???)

Main competitors:
Hard to say, they are so big. We will mention Yahoo, but also Microsoft. And of course every other big media company. Competing with AOL Time Warner will be difficult, they own the users and they own good content.

Propus personal view:
By merging with Time Warner AOL has started a new Internet era. Technology alone will not be enough, content has to be added as well. For us investors AOL is a safe Internet investment but not with enormous upside. It will be a steady growth stock but not with the spectacular growth rates we are almost used to now. There is no question, however, that AOL will stay on top of the Internet.