Investor's stock dump sends AOL to new low
By Emma Moody
Bloomberg News
NEW YORK — AOL Time Warner Inc. shares fell to their lowest level since the biggest Internet and media business was formed 15 months ago as Credit Suisse First Boston brokered a $368 million sale of the company's stock.
CSFB arranged the sale of 18.4 million shares for a single seller at $20 each, 9 percent below yesterday's close. The stock shares fell $1.15 to $20.70 and were the biggest drag on the Standard & Poor's 500 Index.
The block sale came a day after AOL Time Warner replaced Barry Schuler as chief executive at America Online because the Internet unit's fourth-quarter advertising sales tumbled. Robert Pittman, one of the chief operating officers, will take over the role.
"A lot of people are concerned about the advertising environment and the health or growth of the AOL business," said Paul Cook, director of technology investing at Munder Capital Management Inc., which owns 2.5 million AOL Time Warner shares. "There is a lot of bad news in the stock."
Shares of AOL Time Warner, the product of America Online Inc.'s $124 billion purchase of Time Warner Inc., have lost more than half their value since the merger in January 2001.
About 27 institutional investors hold 18.4 million or more of AOL Time Warner, according to the latest filings. Janus Capital Corp. was the largest shareholder with 183 million shares, followed by Barclays Bank Plc, Alliance Capital Management and Fidelity Investments.
AOL Time Warner has twice cut its profit forecasts because of slowing ad sales. The America Online unit was promoted as the company's fastest-growing business. Now AOL's shrinking revenue is pulling down earnings.
"When there is a management change there is almost always something you don't know," said SoundView Technology Group analyst Jordan Rohan, who has a "buy" rating on the shares and doesn't own any personally. "No one leaves when things are wonderful."
Richard Parsons, one of the chief operating officers with Pittman, is also scheduled to take over as CEO next month from Gerald Levin.
Yesterday trading in AOL Time Warner increased to more than 74 million shares, almost four times the six-month daily average.
AOL Time Warner spokeswoman Tricia Primrose said company officials weren't immediately available to comment.
