Your AOL/Time Warner Stock is Going down the Tubes

[Timber Loftis]

Today's NY Times:

Turner Sells a Huge Block of AOL Stock
By DAVID D. KIRKPATRICK

Ted Turner, the vice chairman and largest individual shareholder of AOL Time Warner, said yesterday that he had sold about 60 million shares, more than half his holdings, for about $790 million.

People close to Mr. Turner said that the sale reflected his growing disenchantment with the company's prospects. He effectively capitulated to the 70 percent decline in the share price over the last two years, giving up hope of a significant rebound soon. It was unclear why he picked yesterday to unload such a large stake.

People involved in the transaction said that Mr. Turner sold the shares to Goldman, Sachs, which is seeking to resell them to institutional investors. The news that such a big block of shares will be hitting the market is likely to depress the price today.

There also appeared to be a thaw in the relations of Mr. Turner, whose remaining 45 million shares still make him the biggest individual shareholder, and Stephen M. Case, who is resigning as chairman at the company's annual meeting next week because of pressure from Mr. Turner and other major shareholders.

In a statement, Mr. Turner said he "remains supportive of management and has voted in line with management's recommendations on every item scheduled for vote," including the re-election of Mr. Case as a director.

Mr. Turner is also stepping down as vice chairman, but he confirmed yesterday that he, too, would remain a director. Two people close to him said that he felt an obligation to stay on the board, in part because few of the directors had spent much of their careers in the media business. People close to Mr. Turner said he continued to alternate between warm feelings for Richard D. Parsons, the chief executive, and frustration that he generally feels the company is being poorly managed.

Mr. Turner also ended what had been a long, painful process of gradually selling his shares at depressed or falling prices. He said he was stopping a previous plan to periodically sell smaller chunks of his stock to meet his many charitable commitments.

Those steady sales helped hold down the share price, and some analysts said his decision to finish it off with one big sale might remove at least one burden from the share price.

"From an AOL shareholder perspective, it is nice to see an orderly sale process as opposed to the daily drip of a million-share blocks," said Jordan Rohan, an analyst at the SoundView Technology Group.

Mr. Turner transferred about 10 million shares to a charitable trust before they were sold. All of the shares were sold together to Goldman for a bit less than $13.15 a share, a discount to yesterday's closing price of $13.38 cents. Yesterday, Goldman, Sachs was seeking to sell the shares for about $13.15 a share, people involved said. Goldman, Sachs declined to comment. The shares have recently rebounded from lows of about $10 a share.

Mr. Turner did not specify his plans for the cash he raised, but people close to him said that he did not intend to try to buy back any of his former businesses, like CNN or the Atlanta Braves baseball team, which he sold to Time Warner before it merged with America Online.

Associates of Mr. Turner say he continues to complain about AOL Time Warner's efforts to sell business to reduce its debt. He is especially disappointed AOL has begun seeking to sell the three Atlanta sports teams, including the Braves. And he has been particularly critical of discussions to sell its winter sports teams, the Hawks of the National Basketball League and the Thrashers of the National Hockey League, separately from the Braves and the Turner South regional cable channel. He believes that the teams and channel are worth more together, people close to him said. AOL Time Warner is negotiating a deal to sell the winter teams to David McDavid, the owner of a chain of car dealerships in Texas. But a person close to Mr. Turner said he had no interest in buying back control of the teams.

Mr. Turner has plenty of other uses for his money, including philanthropic promises to the United Nations and other organizations, an expanding chain of Buffalo-meat restaurants and a film company.

Over the last year, Mr. Turner has made no secret of his bitterness over AOL's acquisition of Time Warner, sometimes publicly lacerating himself for leaving much of his own wealth tied up in one company. Mr. Turner's friends say he has been particularly furious about accusations of improper accounting at AOL before the merger closed, raising the possibility that it misled Time Warner's shareholders about its financial health.

Now AOL faces inquiries by the Securities and Exchange Commission and the Justice Department into accounting, mainly at the America Online division before and after the merger. It also faces the possibility of expensive shareholder lawsuits contending that AOL defrauded Time Warner shareholders.

Anger over the merger and its consequences are expected to emerge again at the annual meeting next week, when some institutional shareholders may withhold their votes from Mr. Case over his role as the architect of the deal.

[harleyquinn]

Glad I don't own any stock in them.
Not surprising that they're tanking. Both companies are poor on customer service in my mind in that they don't treat "loyal" customers very well. They both offer everything under the sun to new users, but if you've been a loyal customer for years, do they ever do anything as a thank you? nope

[Morgeruat]

glad to hear it, I've hated AOL with a passion and I can't wait till the company collapses (I still feel sorry for aeveryone it'll put out of work when it goes tho...)

[Timber Loftis]

Originally posted by Morgeruat: glad to hear it, I've hated AOL with a passion and I can't wait till the company collapses (I still feel sorry for aeveryone it'll put out of work when it goes tho...)

Well, I for one just might miss Time Magazine and The Matrix movies. As well as the tens of thousands of jobs here in the states. I am a current and long-time prisoner of AO-Hell, and I hate it, but I do not wish to see such a mega company crumble.

I agree with harley, the way both companies treat loyal customers they both deserve to be tanked.

[Attalus]

I sold my Time-Warner stock right after the merger was announced, I am happy to say. It just didn't pass the "smell-test" for me. I put most of the proceeds into Micro$oft.