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In Around and Online 95 05 05
Date: Sun, 7 May 1995 15:15:14 -0400
From: "Robert D. Seidman" <robert@CLARK.NET>
Subject: In, Around and Online, Issue 2.18
To: Multiple recipients of list ONLINE-L <ONLINE-L@LISTSERV.CLARK.NET>
In, Around and Online- Issue 2.18 - Week Ending 5/5/95
=======================================================
Copyright (C) 1995 Robert Seidman (robert@clark.net). All rights
reserved. May be reproduced in any medium for non-commercial
purposes.
In This Issue...
================
-Notes From The Editor
-How To Get This Newsletter By E-Mail
-America Online Quarterly Earnings Report
-More On AOL's Web Browser
-Delphi's Expansion Plans
-InfoWorld Says *E*nough to eWorld
-Newsworthy Notes
-Short Takes
-Stock Watch
Notes From The Editor
=====================
Delphi members who subscribe to this newsletter seem to be receiving 2,
3 or even 4 copies of the newsletter. The problem appears to be on the
Delphi end. Delphi readers, I apologize for the inconvenience. I hope
the problem is already resolved, but if you see this more than once, please
notify your postmaster. Thanks!
How To Get This Newsletter By E-Mail
====================================
Send an e-mail message to: LISTSERV@CLARK.NET. In the BODY of the
message (subject line is ignored) type:
SUBSCRIBE ONLINE-L FIRSTNAME LASTNAME
Example: Subscribe ONLINE-L Robert Seidman
An HTML version of "In, Around and Online" is available on the Web
at: http://www.clark.net/pub/robert/
The current edition and HTML and Text archives are available by
anonymous FTP at ftp.clark.net in the pub/robert/ directory.
---
America Online Quarterly Earnings Report
========================================
America Online announced that revenues increased 236% to $106.4
million versus $31.7 million in revenue for the same quarter one
year ago. During the quarter AOL added 734,000 new subscribers.
The previous quarterly subscriber record came in the quarter
ending 12/31/94 when they added 421,000 new subscribers. In
spite of record growth and revenue, America Online reported a $2.8
million loss for the quarter ending March 31. However, special
costs associated with research and development and the
acquisitions of Booklink Technologies and Navisoft represented
approximately $7.6 million dollars. An additional charge of about
$300K was taken for after-tax amortization.
Before the special costs, AOL quadrupled net earnings to $5.1
million despite net losses of about $1.6 million on recent
acquisitions and the 2Market CD/Online shopping venture. In spite
of the net loss reported after special costs, the growth rate of
subscribers, revenue and net income (before the special cost
charges) is phenomenal. Further, according to the press release,
the retention rate increased and subscribers are spending more
time online.
"We're delighted not only that AOL's growth accelerated from the
very strong December quarter, but with the improving profitability
of the core operations at a time when we're making big investments in
products, programs and parts of the business that have great
future potential," said Steve Case, America Online president and CEO.
"The coming months are going to be exciting and eventful for AOL
and our subscribers, as we continue working to leverage our
rapidly growing subscriber base and consumerize the Internet,
provide higher speed and wider access to our service, and develop
new revenue streams," added Case.
Later in the week, America Online reported it had reached the 2.5
million subscriber landmark. This makes America Online the
largest online service provider in the United States. Last week,
CompuServe reported they had reached 3 million subscribers, but a
substantial portion of the subscriber base (anywhere from 500,000
to 1.4 million, depending on who you ask) is based on
international accounts. I hope to clarify the CompuServe breakout
in a future edition.
By the Numbers
==============
America Online
Consolidated Summary of Results
(Unaudited)
Three months ended Nine months ended
March 31, March 31,
1995 1994 1995 1994
(amounts in thousands, except per share data)
Revenues:
Online service revenues $99,814 $28,853 $219,582 $63,444
Other revenues 6,600 2,836 15,253 11,855
Total revenues 106,414 31,689 234,835 75,299
Costs and expenses:
Cost of revenues 65,100 18,829 138,561 44,654
Marketing 19,642 6,326 46,530 14,995
Product development 3,453 1,190 8,587 3,276
General and administrative 10,297 3,413 21,985 9,392
Acquired research
and development 7,550 -- 50,335
--
Amortization of goodwill 551 -- 551
--
Total costs and expenses 106,593 29,758 266,549 72,317
Income from operations (179) 1,931 (31,714) 2,982
Other Income 814 463 2,252 1,180
Merger expenses -- -- (1,710)
--
Income before provision for
income taxes 635 2,394 (31,172) 4,162
Provision for income taxes (3,452) (1,122) (9,360) (2,517)
Net Income $(2,817) $1,272 $(40,532) $1,645
Earnings (loss) per share:
Before merger expenses $(0.08) $0.03 $(1.22) $0.05
After merger expenses $(0.08) $0.03 $(1.27) $0.05
Weighted average shares
outstanding 33,622 36,740 31,891 33,632
More On AOL's Web Browser
=========================
Many folks have written in asking, "What's this about TurboWeb and
AOL being much faster than the other browsers because of it?"
While caching on user's hard drive definitely offers some speed
enhancements, there's a lot of other browsers out their offering
that. America Online is also caching documents on their server.
In other words, the first time a person accesses a page, AOL goes
and gets that page from the Internet, the next time someone
accesses the page it is pulled directly from the AOL server. It
appears that AOL re-checks the documents against the Internet
versions often, to see if there have been updates. I'm unclear on
the frequency at this time, but I will find out. Prodigy is using
a similar approach with their Web browser.
The caching locally approach is good for the Internet (takes up
less bandwidth) and perhaps good for the end users (documents load
quicker), but it does cause some accounting problems for those
trying to keep track of their WWW page accesses. As advertising
on the Web becomes more rampant, the importance of accounting for
"hits" on a page becomes critical.
But I suspected there was more to TurboWeb than just local caching
at both AOL and on user's hard drive. It is quite apparent that
when graphics compression is turned on for the AOL Windows's Web
browser (the default setting), that the graphics are being
rendered with the Johnson-Grace ART compression technology. AOL
has licensed the technology for their Window's software and anyone
who has viewed photos in the Top News section (as well as many
other areas) on AOL should be very familiar with the Johnson-Grace
ART "splash" effect as the graphic is drawn.
The new ART encoder from Johnson-Grace can take any image (GIF,
JPEG, etc.) and compress it into it to ART format on-the-fly.
"The encoder is much faster than other compressors and can achieve
virtually instantaneous compression," according to Johnson-Grace
co-CEO, Chris Grace in reference to the on-the-fly conversions to
ART format.
Since it was so apparent that the AOL's Web browser (windows
version) was utilizing this technology, I sought an official word
from AOL on how the Johnson-Grace technology was being utilized.
"Just tell them it's magic," joked AOL president and CEO, Steve
Case.
Mr. Case's response really isn't so surprising. The Johnson-Grace
ART compression really IS faster. But AOL doesn't own Johnson-
Grace so any of the other online services and/or Web browser
companies can license the ART decoder software.
Right now, AOL has the advantage because they are the only one
using it, but that could change quickly. ART compressed graphics
are two to five times smaller in size than their GIF counterparts
so they download 2 to 5 times faster. Someday the bandwidth issue
will go away, but for now, the speed issue is a critical one.
Other companies must be noticing what Johnson-Grace has done with
the ART compression technology.
Johnson-Grace isn't resting on their recent success either.
They're upgrading the encoder software and are adding sound
compression (which will provide the ability for interleaved
pictures and sound in real time over standard 9.6 and 14.4 Kbps
connections), overlays, text compression, animation compression,
and compressed fonts. Publisher's can get the encoder software
for free, while it's in beta and Johnson-Grace will be offering
publishers a special deal to get their Web images into the ART
format (side-by-side with GIFs and JPEGs), so that if a browser is
ART-enabled the user will get the faster images.
Hey, faster is better, and competition drives new and better
products!
Delphi's Expansion Plans
========================
Delphi announced this week that they are moving the corporate
headquarters to Manhattan from Cambridge, Ma. Additionally,
Delphi plans to relocate to a new center in Lowell, Ma. These
moves serve two purposes - it position's Delphi in the center of
the growing "new media" presence in New York City and the Lowell
office will give them room for expansion. Delphi plans to add 750
new employees by the end of the year for a total of around 1,000.
According to Delphi, approximately two-thirds of the employees
will be located in the Lowell office. According to a story from
Newsbytes, the focus in the Lowell office will be software
development and other technical aspects while the focus in NYC
will be on content.
According to the Newsbytes story, a Delphi company spokeswoman,
Nancy Morrisroe, said that Delphi would be creating its own
content for the revamped Delphi service that is scheduled to roll
out later this year, rather than "repurposing" information from
other content providers.
The announcement is good news for Delphi fans and supporters (and
employees). The plans to expands to more than quadruple the
employee base and leasing a 115,000 sq. ft. site in Lowell, Ma.
show that Delphi is by no means throwing in the towel. As has
been noted in past issues, Rupert Murdoch (CEO of News Corporation
-- they own Delphi) can not be happy with the current situation.
There have been many management shake-ups beginning with a new CEO
(Dr. Alan Baratz) being appointed last summer.
Delphi's failure to get out a graphical front end quickly has set
them back. But sooner or later a new and improved Delphi,
complete with graphical interface, will launch. When it does,
they sport one advantage the other services don't have. While the
media holdings of News Corp. are many, the ability to leverage the
Fox Television network as a marketing tool for the new Delphi
service could play a huge roll. Last week the importance of the
25-35 year old market as an advertising demographic was brought
up. Fox has a unique ability to market the Delphi service to this
segment as a substantial portion of the programming on Fox is
aimed at 25-35 year olds.
Delphi may be down, but they are not out. It will be interesting
to follow what happens when the new and improved Delphi is
launched.
---
InfoWorld Says *E*nough to eWorld
=================================
In the May 1 edition of InfoWorld, Editor-in-Chief Stewart Alsop
opens an article entitled "Distributed Thinking" with the
following paragraph:
"You won't find InfoWorld on eWorld anymore. In fact, you probably
won't find InfoWorld on any of the commercial on-line services. (I
don't want to be too definite, just in case someone is willing to
make us an offer we can't refuse.) The reason for this is that we
can't figure out how to make any money on on-line services."
This seems to be a growing concern for newspapers and periodicals
as they migrate towards new media approaches. While clearly,
eWorld's subscriber base is small compared to other online
services, the size of the subscriber base is not the only issue at
hand.
"We could solve this lack-of-readers problem by putting an area up
on CompuServe, on which about two-thirds of our readers have
accounts," said Alsop in the article.
"There is a very high correlation between InfoWorld readers, who
buy and manage PC products in large companies, and CompuServe
subscribers, many of whom need access to the vendor-supported
product forums on that service," continued Alsop.
"But CompuServe has not offered us a royalty rate on which we
could make any money, since InfoWorld's 250,000 readers are small
potatoes to a service with more than 2 million subscribers," Alsop
added.
Another issue is advertising. The online services all plan to
offer their own form of advertising in the near future. Rather
than a content provider lining up its own advertising and getting
the advertising revenue, or at least the substantial portion of
it, the online services are trying to get their paws directly on
the advertising revenues.
"Have you ever heard of a partnership where one partner steals one
set of customers from the other partner in return for a small
amount of money and then turns around and steals the other set of
customers?," asked Alsop.
These are exciting new times. Unfortunately, the dust hasn't
settled (and probably won't for some time) on how to best utilize
the new media for all parties concerned (including the end user).
This exciting phase can test even the most patient of content
providers. In future editions of the newsletter, I hope to speak
more extensively on why new tools for managing information become
almost as important as (if not more important than) the
information itself, and how content providers can leverage
services that will offer these tools to their advantage. Stay
tuned.
As for Info World, the truth is that their archives are currently
available for free via the Internet Shopping Network (ISN). The
ISN requires that users register (free of charge) to access the
service. They want your credit card # so that if you order
anything, they can charge you. You can enter the information
securely if you're using the Netscape browser. For more
information, point your browser to: http://www.internet.net/.
NEWSWORTHY NOTES
================
TELE-COMMUNICATIONS INC. announced plans for a new venture that
will provide faster access to the Internet (as compared to dial-up
modems) via cable TV systems. The new service, dubbed @home, will
initially be headed up by William Randolph Hearst III, a principal
in Kleiner Perkins Caufield & Byers, a San Francisco-based
venture capital firm that has partnered with TCI in the venture.
The service expects to roll-out early next year in a few select
cities and expects to be available nationally within 2-3 years.
@home also plans to provide faster access to commercial online
services like Prodigy and AOL. TCI also has a 20% stake (125
million) in Microsoft's forthcoming Microsoft Network online
service.
---
eWORLD IS PROMISING Web access for its members by mid year
according eWorld
VP/GM, Peter Friedman.
---
THE PROVIDENCE JOURNAL officially launched the Rhode Island
Horizons service on Prodigy this week in ceremonies in Providence,
RI, that were attended by Rhode Island governor Lincoln Almond and
representatives from Providence Journal and Prodigy. "Our goal is
to make Rhode Island HORIZONS an informative and entertaining
place where our customers can hang their hats, catch up on the
news and interact with friends and neighbors," said Edward Huff,
General Manager of the Horizons service. The service is available
nationally via Prodigy for any member for an additional $5/mo.
For more information, JUMP: RIH on Prodigy.
---
COMPUSERVE ANNOUNCED that it had entered into alliances with
MobileComm, PageMart, PageNet and SkyTel to offer, pager
notification when new e-mail messages are received, among other
services. The service will be configurable to allow users to set
up filters that only notify when specific messages are received.
CompuServe expects to begin offering the service this summer.
---
DATATIMES CORP. launched a new Windows-based online business
information service called EyeQ. EyeQ users will have access to
natural language commands, built-in searching tools, and
automated electronic clipping to get focused answers to practical
business questions -- within seconds," according to the press
release. Users can also order presentation ready company and
industry information for delivery via Fax, mail(snail) or courier.
Subscription priced at $39/mo. EyeQ users will only pay the
subscription fee and charges for whatever information they
purchase (i.e., no $$ spent searching for the information). There
is a non-windows version available and an Internet version is
planned by the end of the year. For more info, call 800/642-2525
.
---
FOLIO: FIRST DAY, an affiliate of SIMBA Information, reports that
the ongoing battle between publishers and freelance writers
regarding electronic rights to redistribution is starting to
impact the full-text retrieval database services. Electronic
rights have become a critical issue for publishers as writers want
royalties on work sold to electronic full-text retrieval database
services. Folio: First Day reports that K-III Magazines and the
American Association of Retired Person's Modern Maturity ended
agreements with Information Access Co., now a unit of Thomson Co.
(formerly part of the Ziff-Davis empire) due to the dispute.
---
The New York Times Co. is expanding its offerings by adding UMI
as a distributor of the current day's news from the Times
newspaper. UMI will have the 90 days worth of the Times content
online. Stories older than 90 days will be available by fax,
mail, etc. The Times re-negotiated its contract for electronic
rights when Lexis-Nexis parent Mead Data Central sold the service
to Reed Elsevier for $1.5 billion last fall. Prior to the re-
negotiation, archives of the Times were only available via Lexis-
Nexis.
---
CMG Information Services Inc., which made a bundle when it sold
BookLink Technologies unit to America Online, says its newly
formed CMGVentures company has taken a stake in ProductView
Interactive Inc. ProductView Interactive is developing an
advertising supported e-mail/online/Internet service. Initially
ProductView Interactive services will be e-mail and electronic
brochures. Both services will be free to customers.
---
MORE HOT INTERNET STOCKS? Performance Systems International's
(PSI) initial public offering of 3.8 million shares received a
nice welcome when it opened at $12/share this week. It got as
high as 16 before closing the week at $14.25. Not bad for a
company that's posted losses for the last 2 years. Wall Street
loves the Internet. PSI has been added to the Stock Watch section
under the ticker symbol PSIX.
---
Short Takes
===========
IN CELEBRATION of the centennial of comic strips, the US Postal
Service is issuing a series of commemorative stamps this October.
The stamps are available for preview now on America Online. Also
planned are "Sunday Funnies Live" sessions on AOL through May '96.
The first guest (tonight 8-9pm ET) is BEETLE BAILEY creator Mort
Walker. Scheduled guests for the remainder of the month are: Bil
Keane and THE FAMILY CIRCUS, Bill Griffith and ZIPPY THE PINHEAD
and Bruce Tinsley with MALLARD FILLMORE. See Brenda Starr and
more, at Keyword: Comic Strip on America Online.
---
CANADA HAS A New NBA franchise, the TORONTO RAPTORS (will all the
players be old dinosaur fossils of their former superstar selves?)
and you can write to the president of the new franchise until
5/12, on PRODIGY. Jump: CANADA BB
---
CYBERSEX GURU Nancy Tamosaitis, author of net.sex, and
television/radio personality and Ziff-Davis author, Gina Smith,
will be joined by other experts to discuss Cybersex and the legal
and constitutional issues that surround cyberspace and cybersex on
ZiffNet from 5/8-5/12. ZiffNet is a private area on CompuServe.
ZiffNet members can find out more at GO: EXEC . CompuServe members
wishing to join ZiffNet can look at: GO: ZIFFNET .
---
ITS OWN MEMBERS won't be able to use their service to see it yet,
but eWORLD has launched its first "eWorld on the Web" site.
Called "The Learning Community", it has been put together in
conjunction with eWorld and Apple's Education group. According to
eWorld's Amy Bonetti, "It's a resource for educators, parents, students
and individuals interested in lifelong learning." Lots of information there,
check it out on the Web at:http://www.eworld.com/education/resources .
Stock Watch
===========
This Last 52 52
Week's Week's Week Week
Company Ticker Close Close High Low
------- ------ ------ ------ ------- -------
America Online AMER $43.25 $46.38 $48.13 $13.75
Apple AAPL $38.88 $38.25 $48.06 $24.63
Netcom NETC $27.00 $24.75 $31.75 $16.75
Bolt,Beranek & Newman BBN $18.38 $18.75 $22.25 $10.00
Performance Syst. Intl PSIX $14.25 ------ $16.00 $14.00
AT&T T $50.88 $50.75 $57.13 $47.25
General Elec. GE $57.38 $56.00 $57.88 $45.00
H&R Block HRB $41.38 $42.13 $47.63 $33.00
IBM IBM $93.13 $94.63 $96.88 $54.50
MCI MCIC $21.25 $21.75 $25.88 $17.25
Microsoft MSFT $80.00 $81.75 $83.75 $45.81
News Corp NWS $21.00 $19.38 $25.19 $14.38
Sears S $53.25 $54.25 $54.75 $43.50
See you next week.
