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Author: FoolReprint Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 31  
Subject: Evening News Feature Date: 7/7/1997 9:45 PM
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Monday, July 7, 1997
MARKET CLOSE


DJIA: 7858.49 -37.32 (-0.47%)
S&P 500: 912.20 -4.72 (-0.51%)
Nasdaq: 1470.74 +3.13 (+0.21%)
30-Year Bond 100 19/32 +18/32 6.57% Yield
HEROES
COMPUSERVE (Nasdaq: CSRV) (N) (S) gained $1 5/16 to $12 1/16 as The Wall Street Journal reported that AMERICA ONLINE (NYSE: AOL) (N) (S) bid "roughly $1 billion" for the company last week. If AOL does want to get its hands on CompuServe's subscriber base, the price per subscriber at the whispered price would be about $330 (not including members of licensee NiftyServe), substantially less than the current per-subscriber value on AOL of over $800. Backing out intangible assets from CompuServe's latest balance sheet, such an acquisition would be priced at 1.32 times assets and 1.64 times tangible book value. AOL is trading at more than 10 times tangible assets and more than 100 times tangible book value. If AOL can generate a 5% return on tangible equity with those subscribers, then it will have paid about 33 times earnings. If it can generate that return on its own tangible book value, investors are paying 200 times earnings for AOL.

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