America Online's Stephen M. Case speaks about technology and the Internet yesterday at a lecture at Punahou School. Photo by Kathryn Bender, Star-Bulletin

AOL stock dropped about one-third in price in the past month partly because of reports of insider sell-offs, including Hawaii-born Case's disposal of 275,000 shares at an average of $51 a share over four days starting May 21.

"I've always sold some stock," the 37-year-old Case said in an interview at Punahou School, where the 1976 alumnus visited for a class reunion and delivered a lecture on the Internet on Thursday.

It is more important, Case said, to note that he still has a big holding in the company he co-founded in 1985. Case still has more than 3 million AOL shares, worth about $145 million at the current price.

"Having 85 percent of your net worth in one company shows an awful lot of confidence," said Case.

He said a divorce settlement with his wife of 11 years was a partial reason for the $14 million worth of sales in May but he has sold AOL shares many times in the past when the price was right, in order to diversify his portfolio.

Others apparently share Case's confidence in the firm.

The Wall Street Journal's "Heard on the Street" column on Thursday, noting big sell-offs by investors after adverse reports by analysts, said the 33 percent drop in the stock's price since its peak of $71 in early May is reason to be bullish. (In Nasdaq trading on Friday, AOL shares jumped $2.50 to close at $48.87.)

The paper said some investors see the current price as a buying opportunity and quoted a Bear Stearns & Co. analyst as saying nobody should count AOL out since it has always proved it can provide catalysts of one kind or another.

Case said that when the company went public in 1992, the value of its stock was around $70 million. It had 250 employees, annual revenues of $30 million and about 200,000 subscribers for its user-friendly online computer news and entertainment service.

Now, offering all its traditional services and more, including a full Internet connection, it had revenues of $300 million in just the latest quarter, Case said. It has more than 5,000 employees and 6 million subscribers and its value is about $4 billion, he said.

Case said that despite the growing number of Internet services, allowing subscribers to browse the World Wide Web as much as they like for under $20 month, AOL will always have a place.

One thing that makes AOL different from other online companies, such as CompuServe and Prodigy, is that it has no major owners. (Prodigy is partnership of IBM and Sears and CompuServe is owned by H&R Block Inc., although Block has said it plans to spin it off to shareholders.) The biggest investor in AOL, an institutional holder, owns no more than 10 percent, Case said. "Some of our competitors wanted to listen to their owners more than their customers," he said. "One of the nice things about having 6 million is we know what they are using."

For example, Case said, connecting AOL customers to the Internet didn't make sense until there were millions of them and no matter what the attractions of the Internet might be, AOL's success is in the skill it brings to delivering what customers want to see without having them go through a lot of complications.

The object is to make the technology invisible, he said, making it easy for customers to find what they want.

There is plenty of room to develop new customers, Case said. "Only 11 percent of households in the United States subscribe to any online service." Online services today are about where television was in the 1950s, he said, adding that they just need marketing.

Case, the son of a prominent Honolulu attorney, Daniel Case, graduated from Williams College in Maryland with a political science degree. "My first experience (online) was here in (Punahou's) Bingham Hall," Case said. That was in 1974 or 1975. "I clicked on a key and got a response from some other computer."

He worked in marketing for Procter & Gamble and PepsiCo and said he had a Commodore 64, the startup computer of the early 1980s. When he and some colleagues founded AOL in 1985, the Commodore was still widely used and the most common uses of online services were games and swapping messages, he said.

"We always believed that tens of millions of people would be connected," he said. "We always believed this was going to be a major new medium."