Parsons promises to get AOL Time Warner back on track

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Posted 8:31AM on Friday, May 17, 2002

NEW YORK - On his first day as chief executive of AOL Time Warner, the world's largest media company, Dick Parsons acknowledged shareholders' frustrations with a dismal stock price and promised to take steps to get the company back on track. "None of us on the board or in management are satisfied with our current stock price," Parsons told a capacity crowd of at AOL Time Warner's annual shareholder meeting Thursday at the Apollo Theater in Harlem. "It's a source of deep disapointment for us." The meeting also served as an official transfer of power between Gerald Levin, who is retiring as chief executive after 30 years with the company. Parsons, who had been co-chief operating officer, formally took control of the company on Thursday. Parsons said he planned to get the struggling AOL division back on track. To do so, he recently dispatched chief operating officer Bob Pittman to take over the division, a role he had held before the merger, Parsons also promised to restore the company's credibility with investors by making more realistic projections about its growth prospects. AOL Time Warner chairman Steve Case acknowledged that the company "made some mistakes in the past year," including setting profit targets that were too high. "This past year has been difficult, and things didn't go quite as we expected," Case said. "We have to work to regain your confidence." AOL Time Warner's stock has crashed in recent months after the company failed to meet targets for profit growth and also sprung a number of unpleasant surprises on investors -- including a massive $54 billion write-off to reflect a loss in the company's value since the merger, and losses at its AOL Europe division that were larger than expected. The shares have tumbled about 40 percent since the beginning of the year and are now off a total of about 70 percent since the merger of America Online and Time Warner was announced in January 2000. They edged up 5 cents to $18.90 Thursday on the New York Stock Exchange. At the meeting, several shareholders expressed frustration at the poor performance of the company's stock, and demanded explanations from management for what they planned to do in order to get the company back on track. Michael Hariton, a 36-year-old private investor, delivered a blistering tirade against the executives, chastising Case for spending time away from the job for family reasons and demanding that they bring down the company's $27 billion in debt. "We're paying you guys to be full-time employees. Get the job done," Hariton said, his face reddening. "These are our hard-earned dollars, and you have decimated them. ... Get working." Robert Schue, 62, a semiretired free-lance writer, asked managers why there were "replicating the Taj Mahal in Columbus Circle" -- a reference to the construction of the company's lavish new headquarters building in Manhattan -- after they posted a loss of $54 billion and their share price is under $20. "I think there's something seriously wrong with the management of the company," Schue said in an interview later. "My five hundred shares may not be a lot in the grand scheme of things, but they are a lot for me. My savings are at risk." Parsons, speaking to reporters immediately after the meeting, said he was relieved that the shareholders' meeting wasn't more rancorous. "I thought the tone of the meeting was more gracious and respectful than I anticipated," Parsons said. "I thought the shareholders were realistic and respectful, in the main." ------ On the Net: Company Web site: http://www.aoltimewarner.com