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CNN Live At Daybreak

AOL Time Warner Staggers Into History Books

Aired April 25, 2002 - 05:21   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CAROL COSTELLO, CNN ANCHOR: With assets like CNN, "People" magazine and TV shows like the Sopranos, how could AOL Time Warner go wrong? Well, Time Warner is not the problem, say Wall Street analysts, it's AOL. The parent company of CNN reports the biggest first quarter loss ever by an American company.

CNN's Greg Clarkin has details for you.

(BEGIN VIDEOTAPE)

GREG CLARKIN, CNN CORRESPONDENT (voice-over): AOL Time Warner staggers into the history books, posting the largest loss in the history of corporate America, $54 billion. The loss reflects the drop in the company's assets since AOL bought Time Warner two years ago. It's an eye popping number that Wall Street largely dismissed, chalking it up to a new accounting rule.

What nobody has dismissed are the growing problems at AOL Time Warner, a stock that's stuck at three year lows, slow growth in its core Internet business and a lack of a clear strategy for management.

UNIDENTIFIED MALE: Well, right now there's no strong management direction. I would say it's part of the function of Jerry Levin leaving in May and Dick Parsons now is trying to establish his dream and his direction. So perhaps it is a vacuum in terms of just the transition.

CLARKIN: On the company's conference call, Wall Street's frustration was evident. Here's an exchange between Bob Pittman, COO, and Tom Wolzien of Sanford Bernstein. Wolzien's question was on the advertising business at AOL.

BOB PITTMAN, COO, AOL TIME WARNER: Obviously we're adding every day and we're taking some out every day. But I don't think I can give you any more specificity than that right now, Tom.

TOM WOLZIEN, SANFORD BERNSTEIN: Well, Bob, the problem is that the, that sort of the fear has been that there's a cliff you're going off of from stuff that was sold prior to the merger and that we're seeing now is that's ending and there's nothing else to take its place that's on the books. And I'm wondering if you can at least give us a sense of just how large that may be.

CLARKIN: That exchange has been typical of Wall Street's frustration with AOL Time Warner management. Analysts have repeatedly asked for specifics and in many cases they're getting general answers.

Greg Clarkin, CNN Financial News, New York.

(END VIDEOTAPE)

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