- Marble Hill fires entire sewer department (8/23/16)5
- Ex-Southeast student gets probation for placing homemade sex video on porn site without woman's knowledge (8/24/16)13
- Bootheel lawmaker seeks probe into crop damage by illegal herbicide spraying (8/24/16)1
- The Chrome Queens (8/21/16)2
- Local private school dreams bigger, plans for new building at Sprigg and Lexington (8/22/16)
- Newsmakers 2016: Jason Bandermann (8/15/16)
- New CEO named at Wood & Huston Bank (8/21/16)
- Victims of alleged Ponzi scheme seek compensation from killer's victims (8/21/16)3
- Cape Central football team falls to state-ranked Liberty in Pixley's debut (8/20/16)
- 'Santa' suspect Moffat sentenced to 12 years for sexual abuse of girl (8/23/16)2
AOL Time Warner shares plunge on SEC worries, downgrades
NEW YORK -- Wall Street analysts downgraded the stock of AOL Time Warner Inc. on Thursday, a day after the company disclosed that federal regulators were looking into its accounting.
The company's stock tumbled $1.76, or 15 percent, to $9.64 on very heavy trading of 149 million shares on the New York Stock Exchange, six times the average daily volume. The stock is down about 70 percent since the beginning of the year.
Salomon Smith Barney analyst Jill Krutick told investors that the federal probe added a new level of uncertainty about the stock, despite the fact that business was actually improving at other parts of the company besides its struggling AOL division. AOL Time Warner chief executive Richard Parsons said Wednesday that the Securities and Exchange Commission was conducting a preliminary inquiry into the accounting of several transactions that apparently boosted revenue at the America Online division.
The transactions were reported last week by The Washington Post, which described "unconventional" ways of accounting for revenues that included selling ads to a British entertainment company in lieu of taking a cash settlement in a legal dispute and booking sales from ads that were sold on behalf of eBay.
Parsons said the company stood by its accounting, but acknowledged that the company had to do more than merely follow the rules in light of other corporate accounting scandals.
Many of the transactions in question involve the AOL side of the company, which has run afoul of regulatory authorities in the past. In May 2000, the company agreed to pay a $3.5 million fine to settle SEC charges that it improperly accounted for costs to mail computer discs to potential customers.
In its second-quarter earnings release Tuesday, AOL Time Warner reported figures showing that the problems continue to be severe at the AOL division. The division still has no leader: chief operating officer Robert Pittman, a former AOL chief, quit last week.
At least half a dozen analysts downgraded their ratings on the company.
Jessica Reif Cohen, a leading media analyst at Merrill Lynch, told investors in a note that "while the investigation may amount to nothing, we encourage investors to sit on the sidelines until the investigation is completed."
Fred Moran, an analyst at Jefferies & Co., wrote that the advertising weakness was "much more pronounced than expected and will likely be quite drawn out."
On the Net: http://www.aoltimewarner.com