Any end in sight?: America Online recently announced its 2.5 millionth subscriber, a figure which marks a tripling of the company's customer base in the past 12 months. AOL boasted that it is both the nation's largest and fast-growing consumer online service. Indeed, AOL added 734,000 new members during the past three months alone, some 300,000 more than the previous quarter. And not only does AOL have more members than ever, they are apparently spending more time online than ever as well. The average AOL subscriber spends $17 a month, giving the company a revenue run rate of $500 million, versus just $150 million a year ago, which helps explain the 236 percent growth in revenues during the latest quarter.
Back to the future: AT&T is examining ways to reenter the local telephone business little more than a decade after Uncle Sam forced Ma Bell exclusively into the long distance and out of the local exchange, which has since been the domain of the Baby Bells and GTE. AT&T and Time Warner's cable television arm are discussing a possible venture to package local and long distance telephone service. The combination would pair the nation's No. 1 long distance carrier with it's No. 2 cable operator, whose wires would be used to offer local phone service to a potential customer base of 9 million. While AT&T is still forbidden to offer local phone service, it's only a matter of time before all telecom markets are thrown open, and it has already sold millions of dollars worth of network equipment to Time Warner that will allow its cable network to carry phone calls. In other Time Warner news, the corporation announced it would sell 15 cable systems in rural areas and small towns for $263.7 million in an effort to help reduce its $5 billion debt.
Bad news for Bells: Pacific Telesis watched its stock plummet 8.9 percent after the company estimated its 1995 profits would be 10 percent below the $1.14 billion, or $2.68 per share, it earned in 1994.
The company blamed state-mandated cuts in toll call rates, which depressed first quarter results earlier this month. The announcement triggered concern that the West Coast Baby Bell would cut its dividend, despite its protestations to the contrary, and pushed Pac Tel's its share price down by $2.62, to $27. Share prices of other Baby Bells followed suit, with Ameritech falling by $1.25 and Bell Atlantic by $2.12.