Despite gloomy prognoses about the health of proprietary online services and financial losses reported this quarter by rival CompuServe, the head of America Online issued a statement today declaring his reassurance that AOL is A-OK.
Company president Steve Case said AOL membership is growing rapidly, in defiance of reports that private online services' new subscriptions are shrinking under pressure from public counterparts on the Web. All of AOL's direct competitors--CompuServe, Prodigy, and Microsoft Network--have decided to abandon their proprietary networks in favor of constructing super-Web sites open to the public.
But not AOL. And the leader of the online service pack feels just fine about that, Case said.
"AOL continues to grow members, revenues, and profits. We ended the quarter with 6.2 million worldwide members, and we expect to add hundreds of thousands of net new members in the September quarter, even though we have slowed marketing expenses in recent months as we gear up for the fall," Case said in his prepared statement. He added that AOL is aiming to surpass the 10 million subscriber mark by mid-1997.
Case predicted that AOL earnings reports due next month will show an increase that at least matches industry forecasts of 16 cents per share for the fourth quarter ending June 30. That would be double the rise of 8 cents a share reported for the corresponding quarter in 1995.
The stock market appeared to respond favorably to Case's expressed optimism, as AOL stock rose 3 points to close at 33 today.
In delivering his upbeat assessment, Case took pains to differentiate AOL from its closest competitor, number-two-ranked CompuServe. "There has been considerable confusion and speculation in recent weeks about the online services market, and AOL in particular. This uncertainty was heightened this week when CompuServe announced they were experiencing a decline in membership," Case said.
AOL, on the other hand, remains "uniquely positioned to meet the needs of a mass market."
AOL, MS turn page in publishing plans
CompuServe predicts quarterly loss
AOL improves Windows client software
AOL launches new ad program
AOL calls billing problems isolated
AOL to sell ads for Netscape
AOL stock falls after negative reports