AOL worldwide membership surpasses 33 m

Reshma Kapadia

NEW YORK: America Online, Inc. now has more than 33 million subscribers, the

world's largest Internet services provider said on Friday, pinning the growth to

its new AOL 7.0 software and the launch of high-speed service over cable

television lines in some markets.

The growth data from the Internet unit of AOL Time Warner, Inc. met most

forecasts of Wall Street analysts, many of whom had revised their estimates

downward in recent weeks.

The "33 million mark today is pretty good. It is better than the

restated expectations. Considering the fact that they had to delay the launch of

7.0 by three to four weeks (because of the attacks on the United States) is not

bad," said Youssef Squali, analyst at FAC Equities.

For example, Merrill Lynch lowered its growth estimates in November to 1.8

million new subscribers versus previous estimates for 2 million new subscribers

from the third quarter, when AOL's subscriber base totaled 31.3 million.

AOL said its roll-out of high-speed access over cable in Time Warner Cable's

20 largest markets drove growth, as did the introduction of AOL 7.0 software

with advanced high-speed content. AOL plans to provide high-speed access in

remaining markets next year. Each AOL member is spending almost 70 minutes

online daily, the company said in a statement.

AOL executives have downplayed Wall Street's growth concerns, pointing to new

sources of revenue through new services such as high-speed access, home

networking and digital music as the dial-up market matures.

In a recent note from Goldman Sachs, analysts said the key issue pressuring

subscriber growth was the increasing saturation in the dial-up market, and to a

lesser degree a potential shortfall in international subscriber growth.

Goldman said growth at AOL would be driven more by an increase in average

revenue per user versus new subscriber additions, especially in the next several

years as high-speed access increases.

The company has scheduled a conference call with analysts and investors on

Jan. 7 to discuss the company's plans and outlook as well as introducing Richard

Parsons, who will take over as chief executive after Gerald Levin retires.

Squali said he expected the company to disclose the impact of AOL Europe

during the call. AOL Time Warner is required to buy Bertelsmann AG's 49.5 per

cent stake in the venture.

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