AOL Outlines Plan to Revive Internet Division; Upgrades, New Services Could Attract More Members, Aid Ailing stock.(BUSINESS)

The Washington Times (Washington, DC), December 4, 2002 | Go to article overview

AOL Outlines Plan to Revive Internet Division; Upgrades, New Services Could Attract More Members, Aid Ailing stock.(BUSINESS)


Byline: William Glanz, THE WASHINGTON TIMES

America Online executives yesterday announced a plan to turn around the Internet division of AOL Time Warner Inc. and salvage the company's languishing stock.

AOL will introduce more products and services and increase the amount of Time Warner content available to high-speed subscribers to help stabilize the stagnant Internet unit.

But AOL is unlikely to rebound until 2004.

"We see 2003 as the year we bottom out," AOL Chief Executive Officer Jonathan Miller said yesterday during a presentation for investors in New York.

AOL bought Time Warner for $106 billion nearly two years ago. At the time, the purchase was hailed as a visionary union of a media giant with massive amounts of information and a fast-growing technology company with millions of subscribers.

But the deal has proven nightmarish for people such as AOL Time Warner Chairman Steve Case, who has deflected criticism for the poor performance of the new company.

So AOL Time Warner Inc. had Mr. Miller, who was hired in August, and a host of executives - including Mr. Case - outline a plan to revive the Internet unit. About 700 investors were on hand at a New York hotel to hear AOL officials describe the plan.

"AOL is a business in transition," Mr. Miller said.

AOL, which is based in Sterling, Va., has dragged down AOL Time Warner Inc. since the two companies joined, primarily because of a slumping advertising market. The division's revenue from advertising, which reached $2.3 billion in 2001, will fall to an estimated $1.6 billion this year.

AOL executives said yesterday that advertising revenue will continue to decline next year, and advertising sales will fall 40 percent to 50 percent.

"While we know these numbers are conservative, nobody expected the extent of the conservatism or implied depths of problems," SoundView Technology Group analyst Jordan Rohan wrote in a note to clients.

AOL laid off 90 workers last month from its marketing staff. The combined company's stock has fallen from $72 a share at the time of the merger to $14.21 a share yesterday on the New York Stock Exchange. It is signing up new Internet subscribers at a slower rate than in the past.

AOL Media and Communications Group Chairman Donald Logan sought to convince investors that the company would find new ways to sell ads and improve relationships with advertisers. …

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