The actual cost of the transaction will depend upon how many customers actually make the switch over to Prodigy. One of the company's new strategies is to target its online service to the Spanish-speaking markets in both Mexico and America. Internet is the name, and running on red ink is the game. Just like many of its competitors, Prodigy is bleeding red ink in copious amounts. But unlike other companies that are going through the start-up process, Prodigy has been around for many years and done nothing but lose money.
Historical performance is no guarantee of future results, but it is a pretty darn good indicator.
A more relevant way to have perhaps avoided the Prodigy trouble would have been to look at the market capitalization per subscriber, an extremely handy metric for assessing the valuation the market is putting on online companies. America Online was trading for at the time, it was higher than what other ISPs without significant content and e-commerce offerings were trading at. As mentioned earlier, Prodigy has lost a significant amount of money from its operations over the past several years. When looking at what the analysts predict from the company in the future, nothing but losses are expected. Prodigy is a company that has had an extremely difficult time creating shareholder value in the past, and the competition is not getting any easier.