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Soft landing ahead for AOL when Web stock bubble bursts

Modest stock price and rising tide of subscribers augers well

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Internet Security Threat Report 2014

America Online (AOL) could be well insulated against the anticipated crash in Internet stocks, according to a columnist in Business Week magazine. Writing in the Inside Wall Street column, Mark Cavallone, of Standard & Poor's, said that AOL was trading at well below what it should be and that it is continuing to gain subscribers. Last month, Alan Greenspan, head of the US Federal Reserve voiced concerns over inflated Internet stock prices. In the last six months, AOL has seen its share price triple to just over $87. Cavallone said that this should be more like $115, given the low difference between AOL's stock price and its anticipated sales figures. AOL is expected to announce sales in the region of $4.5 billion for the year. This would give it a stock price-to-sales ratio of around 20, compared with 90 for Yahoo!, Cavallone said. ®

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