TheStreet.com:[AOL's actions] tell a larger tale and will almost certainly spark a Securities and Exchange Commission investigation of the company... When big-name newspapers come out with stories like this, the Feds aren't far behind.MarketPlace:Just 2 years ago, [AOL] paid a $3.5 million fine for calling free CDs it mailed out by the truck load a capital expense, a category usually reserved for expenses like new factories or heavy machinery. By spreading out those costs over several years, AOL was able to show a profit, when it was actually running a loss... The [SEC], historically, has taken the position that repeat violators -- at least in the Commission's view -- ought to be subject to heavier sanctions."Reuters:"The merger is dead....it was one of the biggest blunders committed in merger history.... Cleaning out...these new economy, fast-paced executives is a good thing."
The AOL Watch newsletter had already spotted questions about accounting in May.
[A]s the accounting practices of entertainment companies become more complex, one analyst told the Los Angeles Times that "It's become like a sleight-of-hand routine at a carnival. 'Don't watch this hand -- watch my other hand.'" Earlier this month the New York Times stated that "AOL has suffered because of comparisons to companies like Enron and Adelphia, which had illusive balance sheets."Forbes pointed out last year that historically, if AOL had been forced to pay its volunteer work force from the beginning, "it would not have shown a profit until fiscal year 1999 -- seven years later than it actually did.
[T]he stunt that WorldCom has now been caught at - that is, treating operating expenses as depreciable assets - is exactly the same accounting gimmick that America Online tried to get away with in the 1990s.There's even a group of investors who are lobbying for Time-Warner to "un-merge" with AOL. After all...
CBS:"Despite merging the best interactive environment with the largest cable operator, the company has achieved almost zero synergy..."The Register:The preposterously overvalued AOL shares for which Time Warner sold its soul during the bad old days of the dotcom hustle have, predictably, kicked the conglomerate to the curb. AOL had been deteriorating badly before the merger according to recent reports, but some magic Enronesque bookkeeping by Pittman and company assisted AOL in faking ad revenues and pulling off one of the most monumental cons in the rich history of dotcom fraud.
ECommerce Times[S]pinning off AOL is easier said than done. For starters: Who would want it? Millions of people have vowed never to go near AOL and have lived happy lives on the Web despite their decision.CNN:Like the protagonist in the classic short story, "The Man Without A Country," AOL is The Stock Without A Buyer...
Almost everyone knew that the emperor had fewer clothes on than he purported to...In fact, Steve Case was remarkably blunt in a 1996 interview with Red Herring.
Red Herring: AOL has been criticized for engaging in "creative accounting" for example, treating the costs associated with acquiring new subscribers as capital expenses. What's your answer to this criticism?Steve Case:Well, we've been doing this for 10 years, and we don't think it's unusual at all. (Red Herring magazine. June, 1996)