AOL Time Warner yesterday reported the biggest annual loss in American corporate history, $98 billion. Ted Turner is quitting, following Steve Case out of the executive suite. The Washington Post does not shy away from extreme terms:
- The enormous financial loss comes just two years after the widely heralded $112 billion merger of Dulles-based America Online and Time Warner, a melding of new and established media that Case, Turner and others predicted would lead to a global colossus in the digital age. Instead, the deal has devolved into a corporate catastrophe, with stockholders of both companies losing tens of billions of dollars, and thousands of executives and rank-and-file employees forfeiting once-promising jobs, careers and fortunes.
But the announcement may be the final remnant of the dotcom bust, and the new valuation of AOL may finally be really real.
- The nearly $100 billion annual loss for 2002 stems not from operations, but mostly from charges of more than $80 billion, reflecting changes in accounting rules and a decline in the value of America Online, an Internet service provider, and other holdings. The corporation took a charge of $33.5 billion in the fourth quarter alone because of the decline in the value of America Online. The steep drop in “goodwill” reflects a measure of the difference between the current value of the AOL unit and its higher valuation at the time of the merger with Time Warner in January 2001.
Time Warner and its stockholders got totally ripped, there is no doubt, but perhaps the price for their “exuberance” has now been paid.