AOL Time Warner board's will likely vote to strike 'AOL' from the conglom's name today in a formal acknowledgment that the young merger, which closed in early 2001, was a bust.
If the vote carries, the process would take about a month. The New York Stock Exchange ticker symbol would also revert back to 'TWX' from 'AOL.' With billions of dollars in shareholder value down the tubes, this may be the biggest case of 'never mind' in corporate history.
The old Time Warner sign that used to grace corporate headquarters at 75 Rockefeller Plaza is still around somewhere, people at the company say.
Today's meeting will reunite a fractious group of directors, including former AOL TW chairman Steve Case and impoverished vice chairman Ted Turner. AOL TW's management is said to be interviewing potential new directors. That could indicate the pressure is still on Case and several other board members who received a meager vote of confidence at the company's annual shareholders' meeting last spring.
Case and two of his former advisers, Kenneth Novack and Miles Gilburne, were re-elected to the board in April with an unusually low number of votes, (Shareholders can only vote yes or abstain.) 'Numbers talk,' CEO Richard Parsons acknowledged then, but 'I can't tell you what that means for the board.'
However, it's possible Parsons may only be looking to add additional directors. He has said he'd like to see more diversity on the board, which has been by plagued by squabbling and infighting even as the company's operating divisions chug ahead.
And the mood on the Street has sweetened considerably on AOL TW. The sleek has perked up, climbing steadily to more than $16 from lows around $10 earlier this year. Morale has unproved. Parsons continues to tend the company's balance sheet by selling non-core assets, like the two Atlanta sports teams, whose pending sale was announced Tuesday.
Parsons' highly respected lieutenants Jeff Bewkes and Don Logan have most operating units humming along, with America Online the only real sore spot.
'Now I'm ready to give the company tin A- or a B+ for running the business. And I'm a tough grader,' said media fund manager Larry Haverty of State Street Research. He'd been a staunch critic of the merged company.
He and others note that major storm clouds still hover, however. The Securities and Exchange Commission and the Justice Dept. are still investigating the company's accounting practices and financial disclosure. Shareholders have filed huge class-action lawsuits that some Wall Streeters think could cost the company as much as $5 billion. 'The government has unlimited and money,' said Haverty. 'You know the risk isn't zero.'
High-speed desertions
And America Online's still in trouble. It's losing analog subscribes and not adding high-speed customers last enough. Despite the best efforts of Logan and AOL chief Jon Miller, some think it may be too late to repair the company. More and more Internet subscribers are signing up for high-speed connections directly through their cable or telephone companies and don't need AOL like they used to--they have to want AOL.
'They're being squeezed. They need some really compelling content,' said fund manager Harry DeMott of Gothic Capital. 'AOL throws off a lot of cash. If that cash continues to dwindle,' it's bad news for the parent company.
Parsons has been simplifying AOL TW's financial structure and shoring up its balance sheet. Be sides selling the Atlanta Hawks and Thrashers, he's unloaded AOL TW's stakes in Comedy Central and Hughes Electronics, among other assets. He unraveled the complicated Time Warner Entertainment venture through a deal with part-owner Comcast.
IPO questions
He had anticipated a bundle of cash from an initial public offering of Time Warner Cable, which has been postponed due to the federal inquiries.
That worries some Wall Streeters, who say Time Warner Cable needs the currency, or stock, of a publicly traded cable company to make acquisitions and achieve the scale of industry leader Comcast.
Others actually hope there's no IPO. 'I'm not in favor of the IPO. Almost any company that's spun off a piece of its cable has ended up reeling it back in for more money,' said one major fund manager.
The big transaction in AOL TW's immediate future could be the merger of Warner Music and Bertelsmann's BMG Entertainment. Talks had bogged down over terms, but Bertelsmann appears willing to sweeten its offer.
