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AOL-Time Warner's Money Pit

timothy posted more than 11 years ago | from the step-three-profit dept.

America Online 326

ElitusPrime writes: "There's an interesting analysis of the recently released balance sheet net worth of AOL Time Warner. The net worth of the largest media conglomerate on earth has now been slashed by more than one-third. The conclusion, not surprisingly, is that the merger never should have happened. But there's some interesting financial analysis to show exactly how bad the merger has been for Time Warner."

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Dear Ask Slashdot, (-1)

returnofthe_spork (552824) | more than 11 years ago | (#3432371)

How can I convince my girlfriend to let me cum on her face? I've been begging for two months, only to be constantly refused. Finally, last night, I did it while she was sleeping. Now, she's all mad at me. What can I do? Please help.


Re:Dear Ask Slashdot, (-1)

Ralph Malph Alpha (551824) | more than 11 years ago | (#3432387)

Cockeye two inches from crotch can provide a warm milk for tasting, brothers. Let's all become drinkers together, shall we gentlemen????


http://slashdot.org/comments.pl?sid=31395&cid=33 78 687

Re:Dear Ask Slashdot, (-1)

YourMissionForToday (556292) | more than 11 years ago | (#3432401)

Dear returnofthe_spork,

I'm sorry to say that you're asking the wrong people. Unfortunately, none of Slashteam has ever ejaculated anywhere near a woman, unless you count the time that Jamie's landlady caught him at the moment of truth during an unannounced visit. Perhaps asking the sex gods over at your favorite website and mine [trollaxor.com] might help.

Re:Dear Ask Slashdot, (-1)

Ralph Malph Alpha (551824) | more than 11 years ago | (#3432539)

A woman? Oh god oh lord oh my goodness, don speak of the things like this, you will put a fear in my heart! the wommen is a scary concept for a gaylord.

I pray for a gay, I pray for a day when a gaylord will follow me on a manly carousel and then what follows is a rough and tumble exchange of masquerade and "magic touch". What a divinely!

My legs are akimbo,

Your secret performer. (Yes. I will be posting as Thimoty for the rest of the dainty-ass day.)

http://slashdot.org/comments.pl?sid=31397&cid=33 78 743

Re:Dear Ask Slashdot, (-1)

Bitter Old Man (572131) | more than 11 years ago | (#3432402)

This one is simple. You find a loaded weapon, you point it at her head, and you say "let me cum on your face or I'll kill you." Works for me every time!


Re:Dear Ask Slashdot, (-1)

Ralph Malph Alpha (551824) | more than 11 years ago | (#3432513)

Oh, such annimle! I cannnnot believe the violent that I am believing here. You are a gun pointer? I thought these was the way of the dog, but dog cannot point gun LOLOLOL.

I'm telling you, the most better way for providing a blowjob to equal satisfaction is with a butter. You put it on the organ, and it becomes a buttery attraction for the lovver (man or woman or evan a annimle and feet of animle). it is not resistable, it becomes a lovely treat. Words canot exeperess the emotion!

These are my ancient secrets, I give them to you humble. Prlease enjoy with lovver.

http://slashdot.org/comments.pl?sid=31395&cid=33 78 715

fp (-1, Offtopic)

Anonymous Coward | more than 11 years ago | (#3432382)

my very own first post-i feel honored :P

Waka (-1, Offtopic)

Anonymous Coward | more than 11 years ago | (#3432386)


The reason is simple (5, Funny)

flacco (324089) | more than 11 years ago | (#3432393)

AOL just didn't do enough advertising. Especially on its TW media outlets.

come on (3, Insightful)

Husaria (262766) | more than 11 years ago | (#3432396)

yet they hold three very popular programs amongst the slashdot crowd, AIM, ICQ, Winamp and support Mozilla. Should slashdotters really feel bad that AOL-TW is going down?

Tough at the top! (1)

saphena (322272) | more than 11 years ago | (#3432403)

The charge-off in question - which removes $54 billion in balance sheet goodwill from the company's books

Aw shucks!

Now, AOL, the Inflatable Parade Float? (1)

littlerubberfeet (453565) | more than 11 years ago | (#3432407)

So big and empty
Nothing inside but hot air

When it connected with the float
of some solid metal

And smothered

The Float
That had substance.

This is Gerald M. Levin! (1)

ragnarok (6947) | more than 11 years ago | (#3432654)

This guy must be Gerald M. Levin! After all the article said he was leaving AOL/TW to become a poet!

Re:This is Gerald M. Levin! (1)

littlerubberfeet (453565) | more than 11 years ago | (#3432674)

Sorry to dissapoint you, but I am merely a highschool student. I am not even a poet. But thanks for the ego-boost.

AOL Worth 1/3 less (3, Insightful)

k_d3 (559373) | more than 11 years ago | (#3432410)

Hm... AOL/TW is just an experiment. Things can and do go wrong in experiments. Keeping personal opinions aside, (I hate AOL/TW's guts!), I think it's fortunate for all of the other smaller companies to have a chance. AOL/TW's not making as much money as it could be, in fact, it's losing money. Capitalism at its best (or worst, in AOL/TW's case).

Re:AOL Worth 1/3 less (1)

Anne_Nonymous (313852) | more than 11 years ago | (#3432617)

Definitely its best . When you do something incredibly stupid, you deserve to suffer from your mistake. If this was done under a command economy, the taxpayer-citizens would be throwing money down that rat-hole for years to come. I have no sympathy for the managers, employees, or investors.

Nice office! (3, Funny)

TheNecromancer (179644) | more than 11 years ago | (#3432413)

Did you know, for example, that AOL Time Warner, at latest tally, has nearly 13 million square feet of office space on its books?

And that's just the CEO's office!

I wonder what Walter Hewlet thinks of this ... (2)

Titusdot Groan (468949) | more than 11 years ago | (#3432417)

This isn't surprising, these kinds of mergers almost always go awry at some point. The whole is less than the sum of the parts.

At least Compaq has some actual assets to offer HP -- so maybe, just maybe, Carly won't have to take up poetry in 2005 :-)

Re:I wonder what Walter Hewlet thinks of this ... (0)

Anonymous Coward | more than 11 years ago | (#3432653)

hopefully, she'll take up poetry in 2003.

In the long run... (4, Insightful)

vkg (158234) | more than 11 years ago | (#3432419)

I think they will make out like banditos!

Seriously, these kinds of cross-industry mergers are often appallingly inefficient for the first few years while all of the organizational kinks get worked out.

Then, when you start to see the synergies, they really take off, often out-competing all of the players from the industries the hybrid company was formed from.

In two years, when you see tightly branded Time Warner content (i.e. Bugs Bunny!) "Available Only On AOL!", with AOL billing you per-view on your ISP bill on your DCMA/CBDTPA-enabled home Entertainment Appliance, don't say you didn't have the chance to buy stock now :-)


Re:In the long run... (0)

Anonymous Coward | more than 11 years ago | (#3432477)

Its DMCA, nitwit.

Re:In the long run... (2)

Doomdark (136619) | more than 11 years ago | (#3432534)

No, no, no; you started the sentence right:

Then, when you start to see the synergies,

but the way it continues should be:

They spin off most of these branches that were "not part of the core competency".

See, in couple of years the whole strategy of behemoth company may (will) change. That's the way things work; one fraction sails the boat for a while, then another.

Spin Doctor (5, Interesting)

phriedom (561200) | more than 11 years ago | (#3432605)

Wow, you sure have a bunch of nice buzzwords packed into that short post. But I don't see how any "synergy" is going to turn the AOL unit into a money-making and growing division like it used to be. They are not going to be "out-competing" my local ISP. If they were to start making T-W content exclusive to AOL, they are only going to be choking off the potential for T-W.

AOL made a sweet deal. They turned a vast amount of very perishable stock value into some real assets by buying T-W. T-W was blinded by dollar signs in their eyes. They looked at the (temporary) value of the stock, instead of (real) value of the AOL company.

I know they are not going to shrivel up and blow away or anything like that, but if I was a T-W stockholder I would be pretty pissed off. There were billions of dollars here last time I looked. Where did it go?

I shouldn't be too hard on them though. Tyco, who has nothing to do with the dot-com bubble, and nothing to do with energy trading, and makes and sells actual products rather than just having intellectual property, has dropped in value by 30 BILLION dollars in the last 2 weeks. Think about that: 30 billion dollars that used to belong to stockholders has EVAPORATED in the last 14 days.

Respectfully, no. Not at all. (4, Insightful)

twilight30 (84644) | more than 11 years ago | (#3432635)

"Synergies": dot.com-speak for "We don't know what the hell we are going to do next".

Don't believe me? Look at Margaret Wente's commentary on BCE's chair resigning at the Globe and Mail [globeandmail.ca], Michael Posner's comments on Vivendi's fall from grace [globeandmail.ca], and perhaps most damagingly, a recent NYT comment [nytimes.com] (registration, blah blah) [majcher.com].

One problem is that 'content driving distribution' ends up looking like trying to play monopoly (in general terms, not the board game), especially when the 'synergistic' entity restricts content competition on distribution channels. Remember the ABC cable fiasco from a couple of years ago, when they wouldn't let one channel show up on people's tv screens?

Another is not restricting access to avoid the public/governmental response outlined above: where's the 'synergy'? If there is no 'synergy', why bother?

AOL-TW is just the biggest failure, not the only one. And to be honest, the prospect of seeing this kind of 21st century 'new' mercantilism fail actually doesn't bother me a whit.

well duh... (2, Funny)

edrugtrader (442064) | more than 11 years ago | (#3432430)

time warner employee's all had to switch to aol service, and that shit is expensive!

Re:well duh... (2, Funny)

PsimanX1 (575046) | more than 11 years ago | (#3432443)

And then had to switch back when it all went horribly wrong...

Wasn't that surprising?

Re:well duh... (1)

FilthPig (88644) | more than 11 years ago | (#3432479)

I wonder how much revenue went down the tubes in switching to AOL mail and back (http://slashdot.org/article.pl?sid=02/03/22/14023 0&mode=thread).

Of course, you've got Fox news reporting this, and MSNBC reporting on the story linked above. Neither of which are likely to paint a pretty picture of their rivals.

AOL/TW ExecThink (C)(TM) (1)

GraZZ (9716) | more than 11 years ago | (#3432441)

"Confused Slashdot geeks into thinking we're not so big and evil..... CHECK"

"Confused rival media company FOX into thinking we're not so big and evil....... CHECK"

"Little guy crushed....... CHECK"

"Big and evil agenda proceeding as planned...... CHECK"

Face it folks, this drop in net worth is NOT going to stop AOL/TW from doing anything that we'll hate. FOX surprisingly got one thing right: "....the balance sheet net worth of the LARGEST MEDIA CONGLOMERATE ON EARTH has now been...." (text capitalized by AOL/TW router during transfer to let you know just how big we are MWAHAHAHAHA)

Karma, karma, everywhere, so let's all have a drink!

The day of reckoning is yet to come for dot.com (1)

00_NOP (559413) | more than 11 years ago | (#3432444)

No one should think that, just because they have survived the worst that they've made it through.

It is when the recovery - already started - picks up speed that the brutallity will accelerate too. That's when businesses will have the funds available to meet the costs of dumping the really unprofitable bits they own - and as this story shows, that's going to include a lot of IT/internet related ventures.

Not that I am saying AOL will get tourched - but many smaller (but still get big) operations will go - like Compuserve probably.

How Much Longer? (0)

Anonymous Coward | more than 11 years ago | (#3432446)

How much longer will we get the opportunity to remind our clueless friends and acquaintances that AOL sucks?

Clearly, the supply of morons who think AOL has something to do with the Internet and the Web has finally run out.

The merger was, of course, one of the most idiotic business deals of all time.

But at last, AOL's shitty karma has caught up with it. Munchkins rejoice!

Gee, ya think? (1)

delta407 (518868) | more than 11 years ago | (#3432448)

It's all those free coasters, frisbees, and clock parts they keep sending out. No wonder they're going downhill.

Yes, I'm aware that the free CDs help AOL greatly, but still :)

You're a lot more right than you think (3, Interesting)

Anonymous Coward | more than 11 years ago | (#3432527)

I predicted a few years ago that since AOL's marginal cost for aquiring each new customer keeps going up, and their revenue per customer keeps going down, at some point in the next few years it will cost them more (in advertising and CD distribution) to aquire each new customer than they earn from that customer -- at which point the business implodes. Apparently it hasn't happened yet, but I still consider it a real possibility. AOL doesn't have a viable business model. At least Time Warner had a business model -- milk your (historical) content for all it's worth, and screw your cable customers out of every penny you can get.

crosses fingers (2, Redundant)

reaper20 (23396) | more than 11 years ago | (#3432450)

Everyone put your hands over your ears and chant "please don't kill mozilla, please don't kill mozilla, blame it on accounting ... "

Re:crosses fingers (2)

ender81b (520454) | more than 11 years ago | (#3432537)

It would be inane of them to destroy mozilla considering it costs them very little for the benefit they get out of it. Considering that *Alot of the development is carried out for free and they have little overhead - some yes, from developers who work on project/netscape + cost of bandwith and etc, but all-in-all it is probably very cheap to run.

The benefits are simple: don't have to pay to license IE for every single AOL/Compusever/whathaveyou install. Plus the possibility of actually developing a competive product is probably high and the desire to not become a Slave of MSIE is also, I'm sure, a good motive.

Of course corporate america offen does totaly asi9 things that boggle the mind but this would be an all time f*ck up.

Re:crosses fingers (3, Informative)

OneFix (18661) | more than 11 years ago | (#3432547)

Not likely...

First off, Mozilla uses an open source license...while not GPL/LGPL, the idea is the similar. This means that if AOL/Netscape dropped support, someone could always take it up...

But the truth is, Mozilla is one of AOL's biggest hopefuls...it will be taking over as the standard AOL browser and will be used by many companies who want branded browsers and still more that don't want to use IE as their in-house browser (IBM, Sun, etc)...

Re:crosses fingers (-1)

returnofthe_spork (552824) | more than 11 years ago | (#3432589)

Mozilla's open-source license doesn't mean jack when you realize that the vast majority of the work has been done by paid AOL employees(and it's still a piece of shit). If AOL had never been there, it would have taken 20 years to get to 1.0 instead of 4 or 5 years.

Also, Mozilla is little more than a political card to AOL. There are few if any companies that want to use anything other than IE - and why not, it's the best available.

I'm not too worried (2)

Dark Paladin (116525) | more than 11 years ago | (#3432552)

At the moment, with Mozilla at almost-but-not-quite-there 1.0 version, it now has enough momentum that even if AOL killed off the funding, it would probably do pretty well. The Gecko core is helping other businesses, and since AOL knows that MS is their #1 enemy (right behind that furry thing that crawled up Wolf Blitzer's chin and died), they're going to keep their bets open. With moments like this, they'll at least keep it as a bargaining chip:

AOL: So, Mr. Gates. Do you want to put AOL links in Windows XP - or do we need to shift to Mozilla and watch as web developers remember how to program HTML 4.0 compliant web pages?

Sun / Netscape / AOL (2)

twilight30 (84644) | more than 11 years ago | (#3432662)

< sarcasm off > Um, could someone quickly enlighten me as the precise relationship of Sun to AOL-TW? Are they a full component of AOL now? Were they ever? How does that relate to Netscape and so forth?

From the article AOL owns Netscape wholly, but I still don't really see how Sun fits in. Anyone with a cluestick, comments greatly appreciated.

Jeez. (4, Funny)

SlashChick (544252) | more than 11 years ago | (#3432454)

From the article:

"You can get as much of a return by investing in a U.S. government bond these days as you can from throwing your money into the AOL Time Warner black hole."

Uncle Sam should definitely co-opt this for advertising: "U.S. savings bonds: not as bad as investing in AOL."

What AOL Acquires Turns to Sand... (3, Interesting)

idonotexist (450877) | more than 11 years ago | (#3432460)

While I cannot present any proof, I am convinced what AOL acquires, AOL screws up. Netscape is a prime example. Certainly Netscape had value (server app, a browser...) prior to its acquisition by AOL and after acquisition, AOL left Netscape with a simple homepage. I guess I'll see if AOL brings Time Warner's assets to its knees. Certainly the Road Runner service is not improving since the merger.

Re:What AOL Acquires Turns to Sand... (2)

teslatug (543527) | more than 11 years ago | (#3432568)

I think they were pretty much done in by Microsoft's IE. If they had value why didn't they continue to exploit it? It's not like AOL wants to throw money away for no good reason.

Exec payola (2, Insightful)

hedley (8715) | more than 11 years ago | (#3432464)

These guys (Levin et al) live in a strata that most peons can't even comprehend. Imagine if you can, sitting there, seing on paper a massive payola for you personally if the deal goes through. Now... your task is to spin the deal to the shareholders so it looks like a great deal. Cha-ching.

It could have been worse... (0)

Anonymous Coward | more than 11 years ago | (#3432467)

...they could have realized this when they sank AOL's broadband business by endorsing the DMCA/xxAA bill of the week five years from now.

AOL Time Warner record deal... (3, Informative)

Byteme (6617) | more than 11 years ago | (#3432468)

Somewhat related, possibly goes to show why AOL is losing money. Ironic to say the least.

Wilco's recent deal with AOL [thedmonline.com] subsidiaries:

It's their least poppy and most experimental effort to date. Which is why Reprise Records rejected it last summer: if the suits don't think you have a hit single, you're S.O.L, no matter how great your album is. Thankfully, after a fall tour and six months of shopping around, Wilco wrested "Yankee Hotel Foxtrot" back and sold it to Nonesuch. Both are subsidiaries of AOL Time-Warner, so in an ironic twist, the band was paid twice for the same album by the same company.

biggest loss ever by any company (2)

_ph1ux_ (216706) | more than 11 years ago | (#3432469)

was by AOL time warner which had a stated loss of 58.20 Billion bux.

Re:biggest loss ever by any company (0)

Anonymous Coward | more than 11 years ago | (#3432655)

Anyone remember that part of UHF where Kuni is doing that game show and the contestant picks what's in the box rather than the sure thing prize? Now, imagine him saying to TimeWarner: "STUPID! You're so STUPID!" :-) Please mod this up to +5 funny.

Personally what I think they should do. (2, Interesting)

papasui (567265) | more than 11 years ago | (#3432475)

In order for them to be succesful they need to have time warner drop roadrunner and make it AOL high speed access. The simple fact that its possible to have time warner roadrunner without AOL reduces the value of AOL-TimeWarner. Granted, this would make some of RoadRunner's users unhappy, but if they charged a comperable rate to what RoadRunner is right now I would assume the vast majority (power users excluded) wouldn't care. And for those that hate AOL they could up the price of basic roadrunner service and give a faster connection without AOL. I work for a competitor of RoadRunner (although I live in RoadRunner subscriber area) and I personally recieve about 5-10 phone calls a day about people wanting our service so that they can use it in conjunction with AOL.

Re:Personally what I think they should do. (1)

owlmeat (197799) | more than 11 years ago | (#3432593)

Now it's my personal opinion that dropping the roadrunner would be a disaster. I mean, who would Wile e. Coyote have to chase if they get rid of the bird? And what about all the ACME stuff that would go to waste?

Re:Personally what I think they should do. (0)

Anonymous Coward | more than 11 years ago | (#3432670)

I work for a competitor of RoadRunner (although I live in RoadRunner subscriber area) and I personally recieve about 5-10 phone calls a day about people wanting our service so that they can use it in conjunction with AOL.
In other words, people are still paying for AOL even if they get their broadband from someone else. How is dropping Roadrunner going to change that? Either they pay for RoadRunner plus AOL or they pay for your (competing) service plus AOL - which do you think AOL would prefer?

Keep in mind this is a foxnews article (5, Insightful)

Edmund Blackadder (559735) | more than 11 years ago | (#3432484)

And Fox is a direct competitor with TimeWarner in most of its media ventures.

And lots of the article is rhetoric and not financial analysis - is it that importent that they own more office space than the pentagon? They are a large company after all. The article also bever analised the earnings, saying thet the assets are most important.

Truth is "good will" (by its technical accounting term) was never really considered as a real asset. Also the billions of dollars of goodwill can suggest that TW shareholders got a good deal, because they got payed a lot over the assets of time warner at the time of the merger.

But i can easily believed that their financial statements are complicated and whole companies are hidden, so their performance cannot be seen. AOlTW is not the first large company to do that.

Re:Keep in mind this is a foxnews article (2)

mmacdona86 (524915) | more than 11 years ago | (#3432546)

The goodwill is what justifies a high stock price in a merger--in that sense it is definitely an asset. Most of the "goodwill" disappeared from the AOL side, so it is the AOL shareholders that got a deal on this. Time-Warner shareholders got abused.

ok lets think this out (2)

Edmund Blackadder (559735) | more than 11 years ago | (#3432576)

Aol bought TW. The good will is the price over assets payed by a buying company to a company that is being bought.

Since TW was being bought it is their goodwill that got put in the books. If that good will was really high, it means that AOL payed a lot over the assets of TW for TW. Which means that TW shareholders got a good deal.

Tell me if i am wrong somewhere.

Actually it's a New York Post article (1, Informative)

Anonymous Coward | more than 11 years ago | (#3432583)

Fox is just carrying it from the wire, so it's not necessarily as biased as something straight from Fox would be.

Re:Keep in mind this is a foxnews article (2)

_Sprocket_ (42527) | more than 11 years ago | (#3432597)

And lots of the article is rhetoric and not financial analysis - is it that importent that they own more office space than the pentagon?

I noticed that too. In that part of the article, they were drawing some comparisons with the Department of Defense - org. charts and office space measured in the non-industry-standard Pentagons (I have yet to see a sign reading "Office Space Available - .15 Pentagons"). My cynical streak screams that this was an attempt to link AOL/Time Warner with the PR hobgoblin of inneficiency and waste the DoD has been trying to shake for the last couple decades.

Of course - if you really want to make the comparison stick, instead of focusing on the square footage of one DoD building (the Pentagon)... lets compare the square footage of office space claimed by AOL/TW and the square footage of office space held by the entire US DoD.

Betcha the point falls flat.

Good will is how much you *over paid* ... (2, Insightful)

Titusdot Groan (468949) | more than 11 years ago | (#3432612)

Truth is "good will" (by its technical accounting term) was never really considered as a real asset. Also the billions of dollars of goodwill can suggest that TW shareholders got a good deal, because they got payed a lot over the assets of time warner at the time of the merger.

What? Good will is what you carry on your books to reflect the difference between the assets you got in the buy out or merger and what you paid for those assets. In real terms it's how much you overpaid for the company.

Not that this is necessarily bad -- pretty much all companies are worth more than their assets. If it was otherwise somebody would just buy the company and strip them of their assets! This happened in the eighties ...

The reason the SEC is making companies write off good will is that many companies were pretending it was an asset! And succeeding as your message somewhat indicates. It is NOT in any way, shape or form an "asset" and is the one of the biggest accounting hornswoggles ever invented, just before "pro forma" results :-(

Typical.... (2)

SHiFTY1000 (522432) | more than 11 years ago | (#3432491)

From the Article: even as the man who presided over the drowning - Mr. Gerald M. Levin - heads for the exit door, a $1 million per year "consulting" contract stuffed in his briefcase.

Isn't this just so typical? Who are these elite executives with their golden parachutes? Even the execs of Enron got performance bonuses well after the company went bankrupt. IMO, this sort of cronyism is what is wrong with the corporate world today (apart from mindless greed and monopoly building)

I hope they go down...

Re:Typical.... (1, Insightful)

Anonymous Coward | more than 11 years ago | (#3432596)

A million bucks is CHEAP! A decent management consultant shop will charge far far more to recreate the i nformation int he CEO's head. He knows a lot about what is going on and paying him something to have him ease the new guy into the job isn't such a bad idea. Having the CEO have to figure out everything for himself can slow the company down for a few weeks and time is money, and the competition doesn't stop.

However, the deal was great for AOL (1)

sisukapalli1 (471175) | more than 11 years ago | (#3432493)

AOL, on its own, would have probably gotten washed away in the dot com bubble burst -- or become a substantially smaller company (in terms of market cap) like Yahoo.

In a way, Steve Case, and entire AOL stock holders, sort of "sold their stock" at the right time by buying TWX. That is a great tactical step. AOL would be much worse off (again in terms of market cap) had it not merged with TWX.

The goodwill stuff is a little "pie in the sky" type of thing. The most important thing is that AOL Time Warner will exist for a long long time and will make money in the long run. AOL on its own probably couldn't have made it in the long run (especially after the burst).


Interesting analysis? Hardly. (1)

g051051 (71145) | more than 11 years ago | (#3432504)

Calling that piece "an interesting analysis" was off the mark. It seems to be a pure opinion piece, and by a Time Warner competitor. There wasn't even a hint of journalistic neutrality. This kind of junk doesn't deserve to be recognized, let alone thought of as news.

If it was only US$50 Billion... (4, Interesting)

AKAJack (31058) | more than 11 years ago | (#3432505)

...but unfortunatly the value of AOL/Time Warner is down over $150 billion if you look at stock prices now and what they were when the "merger" took place.

Don't expect them to answer any questions about:

What assets EXACTLY did you write down?
What about the rest of that lost value, when are you going to take that hit?

Inflated .com dollars from AOL didn't buy Time/Warner. It was a stock trade that did it and that's what will kill Time/Warner on their end of this "deal."

Big problems brewing for the future.

Re:If it was only US$50 Billion... (0)

Anonymous Coward | more than 11 years ago | (#3432620)

The asset that written down is called "goodwill" i.e. the value of the AOL name etc... It cost a LOT of money to get every human on the planet 50 aol disks and to knwo what the company is and waht it does so that gets built up over the years. When you do a merger/purchase etc all of the value over and above the assets go onto the balance sheet as "goodwill" which you get to write off over a LOOOOOONNNNGGG time. But sometimes you've got write that down which is what happened today.
The core operations of the company have not been afected at all, they will be around tomorrow.

Time Warner traded cow for magic beans (2)

mmacdona86 (524915) | more than 11 years ago | (#3432525)

--and there is no beanstalk growing. AOL, on the other hand, was smart enough to convert it's Internet hyped valuation into control over a company that would be worth something after the crash.

Re:Time Warner traded cow for magic beans (1, Insightful)

Anonymous Coward | more than 11 years ago | (#3432619)

AOL, on the other hand, was smart enough to convert it's Internet hyped valuation into control over a company that would be worth something after the crash.

Does anyone else think that AOL pulled the biggest dotcom coup of all? Sure, thus far they haven't been able to do much with TimeWarner, but I do think they played their chips wisely while they still had 'em.

This is just Karma (2)

PD (9577) | more than 11 years ago | (#3432528)

AOL was the first destructive force on Usenet. (spammers were the second).

Everyone who is happy to see these bastards writhing around please follow up with a "me too". And then post something stupid. And then someone else followup (without quoting the original article, or if you do, get the attributions all wrong) with a heartly LOL, or even a ROTFLMAO.

AOL losers make me sick. I never saw a Henry Spencer post with LOL in it.

Re:This is just Karma (0)

Anonymous Coward | more than 11 years ago | (#3432572)

me too! (My first ISP was AOL, for about 3 months...)

Re:This is just Karma (1)

robkore (251928) | more than 11 years ago | (#3432585)

Me Too!!!!!
Visit my new homepage at http://members.aol.com/robkore/ !!!!

uh oh... here come the moderators... oh well...

It's all those CD's (4, Funny)

teslatug (543527) | more than 11 years ago | (#3432529)

They probably just wanted to send out a couple of samples, but due to programming deficiencies ended up in an infinite loop and now they can't stop sending people free CD's.

uh oh, I can't hold it in.... (0, Offtopic)

searcher (24154) | more than 11 years ago | (#3432543)


now is a great time to buy really (1)

nich37ways (553075) | more than 11 years ago | (#3432558)

look at what was done by people in the 70~80's especially Sir James Goldsmith who made 500 million US off one deal alone by breaking up these synergized copanies to get at the real value. I won't be suprised if at some point in the future there is some kind of repeat of companies buying others for breakup value again and there is another wave of mass money making from doing nothing but spoting value where noone else does

Insightful? Bah. (5, Insightful)

KFury (19522) | more than 11 years ago | (#3432561)

The linked article is actually very poorly written, and highly specious in its analysis.

"Save for the monthly subscription revenue, there was nothing much to the AOL business to begin with, as the first mild downturn in the economy has convincingly shown, with advertising revenues from the service having now collapsed in a heap."

Actually, AOL was making quite a lot of money on advertising, and though the online ad market dove after the merger, that doesn't qualify the statement that there was nothing there to begin with.

The whole tone (mocking poetry writing, yapping about black holes, colloquialisms instead of actual business terms, and the overly familiar 'I-you-we banter' show this article to be a sensationalist 'I told you so (even though I didn't) editorial rant, and not an 'analysis' of any kind.

I'd love to find out where the money went, but the only thing this article taught me is that Fox's online news is the equivalant to WB's prime time news.

Re:Insightful? Bah. (0)

Anonymous Coward | more than 11 years ago | (#3432590)

So would trust a piece from CNN(who's parent company is AOL/Time Warner), any more?

Re:Insightful? Bah. (1, Informative)

Anonymous Coward | more than 11 years ago | (#3432640)

There was no "money" it was all what is called goodwill. That is what gets recorded on the balance sheet of a company to balance out the diffrence between what you paid for a company and what it's assets are worth. It is supposed to be a measure of the "value of a name".

NYPost by way of the Inquirer (4, Insightful)

sweatyboatman (457800) | more than 11 years ago | (#3432563)

I know trolls are an ever-present nuisance on Slashdot, but posting a troll as a news post? I mean come on!

  • "a biblical-sized tidal wave of losses"
  • "To reconnect with his feminine side and "write poetry" as he eases into early retirement."
  • "the largest balance sheet evisceration"
  • "advertising revenues from the service having now collapsed in a heap"
  • "after more than fifteen months of bloodletting"
  • " last week's write-off has only thrown $54 billion of it into the trash bin"
  • "more could disappear before the carnage is complete"
  • "You can get as much of a return by investing in a U.S. government bond these days as you can from throwing your money into the AOL Time Warner black hole."

Yes AOLTW is getting slammed and their value is low, but so are many former high fliers. This guy doesn't provide any real insight into the situation. He's just flaiming AOL/TW.

And to me this just looks like merger pains. In ten years, maybe, we can begin to pass judgement on whether the deal was worthwhile.


Tulips for houses (2)

new500 (128819) | more than 11 years ago | (#3432564)

. . .

To me it was always a story of AOL cashing out its funny money stock at the height of the internet boom. Many manias have come and passed, leaving a scorched trail of people who bought in too close to the last hurrah. My guess (since largely vindicated) was that Time - Warner was one such sucker.

Nevertheless, TW was desperately seeking growth, as a mature massive media business. It's much harder to grow incrementally the larger you get and still hit that year on year percentage target for your shareholders. TW's growth prospects were heavily tied to, e.g., newsprint subscriptions, and the internet boom looked then to be able to run and run.

As many corporations who have been out of fashion have found (think banks during the '70s, when all the "smart" money was in the conglomerate boom) out of fashion can quickly mean out of access to capital too, and print and press is desperately cyclical, and very capital intensive - worse even, tied to the sharp acceleration and decelleration of advertising which behaves exaggeratedly in synch with that most nebulous of economic indicators - sentiment.

Things change, and may get better for AOL - TW, but boy does it look tough for them for the forseeable.

Here's some selected quotes from recent Financial Times articles :

But broadband is different. Anyone buying a high-speed internet access over a cable system, for instance, will already be paying for the cable company's own ISP. Why pay for AOL as well [ft.com]

The logic of the synergies, and the merger itself, have failed. . . . shareholders consistently fail to restrain management from empire-building. . . a fine example of hope triumphing over reason . . .AOL used its overvalued paper to buy some real assets . . .Those loyal to Time Warner shares have underperformed the media sector by more than 60 per cent. [ft.com]

It's a sad indictment of much of mainstream press that which was - to me at least (and allowing I spend a good deal of my time studying speculative bubbles) - plain dang obvious, is only talked about now - after we've all been hit by the train. But then it's easy to go with the flow, ain't it?

No wonder they're bleeding money (2)

Doomdark (136619) | more than 11 years ago | (#3432566)

I bet their cash flow displays about 2 billion $ annually for producing those (sn|cr)appy little "AOL 8" CDs that they send. I've so far received 12 of those (I kid you not); of which highest daily batch was 3x. They sure are desperate to try to lure me into Happy AOL family...

The irony is that I could actually use my free corporate AOL account if I wanted to, to begin with, but have absolutely no intention to change from the cool and reliable local smallish ISP I'm using.

AOL made a very smart move (2, Insightful)

MeanGene (17515) | more than 11 years ago | (#3432581)

They realized that their stock was overpriced in the "Internet bubble," but unlike the rest of us mortals they could profit from it by buying a "real business."

They did an equity swap (as opposed to getting bond financing) which was a great move. JDS Uniphase could've bought, say, Boeing - but they didn't and now they're worthless [yahoo.com].

No wonder the "original" TimeWarner people are pissed - they were had by a bunch of cowboys, and there wasn't a goddamn thing they could do about it at the time.

Goodwill: The Asset Balloon (3, Interesting)

jamesmartinluther (267743) | more than 11 years ago | (#3432600)

My accounting teacher got pissed at me last year when I opined that the "goodwill assets" are often what a company overpaid for some other company. He called it the "keys to the business" and said that it was something of value.

I think that this can only be true if the keys were bought for a reasonable price. TW shareholders got ripped off because they gave away the keys of the business for too little tangible value (in the form of new AOL shares). TW shareholders got greedy in approving that merger and, if they did not unload their new AOL stock quickly, lost out big time in that deal.

Financial leaders such as the CFO and the CEO need to apply engineering principles to the financial aspects of the companies they are responsible for. How is that tall buildings structurally fail far less often than the corporations that contain them? Shareholders also need to analyze financial statements and the decisions that they vote on (especially mergers) in the same way.

- James

Cost of CDs (2, Funny)

Servo5678 (468237) | more than 11 years ago | (#3432601)

Finally, after all these years, the costs of sending out free AOL CDs has finally caught up with them!

all i can say is (0)

Anonymous Coward | more than 11 years ago | (#3432624)

HAHAHAHAHA i hope you go belly up you fuckers! time warner's road runner is shit! their customer service doesn't exist. i'm moving in 2 weeks and no more time warner for me! dsl & satelite all the way!

Am I the only one.... (0)

Anonymous Coward | more than 11 years ago | (#3432628)

... who questions the source of this article, from the Fox network? You don't suppose the competition between the two contributed to the analysis?

Merger was good for AOL shareholders (4, Insightful)

andrel (85594) | more than 11 years ago | (#3432629)

Steve Case, chairman of AOL is an investing genius. AOL stock was wildly overvalued at the time of the merger; the price would have tanked with our without the merger. Case used internet bubble speculation to buy Time Warner, converting soon-to-be-worthless paper into a valuable asset. Without the Time-Warner side of the company AOL would be worth a lot less today. (The Time-Warner side might be better off today without the merger, but it was definitely good for AOL shareholders.)

Interesting... (5, Interesting)

OneFix (18661) | more than 11 years ago | (#3432634)

As the leading U.S. broadband provider, Time Warner Cable added 278,000 net high-speed data subscribers this quarter, for a total of 2.2 million. This is an increase of 1.0 million high-speed data subscribers, or 86%, since the same period last year. At the end of the quarter, digital subscribers represented 28% of basic cable subscribers while high-speed data subscribers represented 11% of eligible homes passed.

It looks like they are trying to spin this as a positive, but if we belive this [slashdot.org] story, they are almost treated as a liabilty!!!

Ok...so exactly how are they going to spin the fallout when they see a mass exodus after they implement these bandwidth usage quotas...it's been discussed before, regardless of their usage, the average user will flee at the first hint of bandwidth usage quotas...

Downright unreadable. (1)

EvlPenguin (168738) | more than 11 years ago | (#3432643)

The FoxNews article is so full of hyperbole and peurile "artistic licence" that it's rendered unreadable. On K5 this would get -1.

But we're not on K5 now, are we? Hrm.

Lets just wait and see. (2)

LordZardoz (155141) | more than 11 years ago | (#3432666)

Admittedly, right now, AOL-TW is a huge confused mess. Its ugly, inefficient, and bloated. And no one likes them.

However, that is not to say that there is no chance of things working out. That chance is diminishing, but it is still there. Once the situation with media over internet and copyright gets sorted out, things could work out quite well for them. They could very well succeed yet.

Then again, they could also screw it up. In either situation, it should be very intesting to watch. So lets just wait and see what happens.


AOLTW's Future (1, Funny)

Anonymous Coward | more than 11 years ago | (#3432668)

An Open Letter to our Stock Holders

We here at AOL Time Warner believe that our quality service and ability to deliver content rich applications can be leveraged in many areas of society. Therefore we have instituted an agressive expansion plan that will allows us to better serve our customers and the American Society at large. We are excited about the future of AOLTimeWarner and hope you will be too.
First, We have managed to secure the National Public School system in an asset swap with the US Government (The FBI REALLY wanted to get thier hands on our extensive Consumer Databases, plus the Republicans are in power.)
Secondly, we have bought out the rights for the bible (for our exclusive broadcast rights in China) Jesus now isn't only pitching Peace and Love, but also Gillmore Girls.
Finally, we have obtained exclusive rights to the Milky Way from the governing body (this was a hard negotiation, wich boiled down to us stopping all transmissions of Smallville into space) Now rednecks (our number 3 customers, behind Teenagers and Algae) will no longer have to worry about any "Recreational Anal Probes"
I am pleased to bring you these changes and I hope to see you at the next stock holders meeting.
Richard Parsons, CEO
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