AOL "cooked books" as dot.com bubble burst

AOL misrepresented its accounts in three quarterly periods as the 'New Economy' bubble was bursting, according to an investigation by the Washington Post. The Post examined $270 million worth of deals made during 2000 and 2001, a period when dot.com collapses - a key source of AOL's ad revenue - were threatened to the online giant's explosive ad revenue growth.

According to the Post, aided by two senior former executives including Robert O'Connor AOL's VP of finance for the megalith's advertising division and James Patti, a senior manager in the BA (business division) department, which was responsible for negotiating deals.

In October 2000, AOL's then President Bob Pittman deceived financial analysts and investors by saying he "didn't see" any drop-off in advertising revenue, although two weeks earlier he had been briefed about the fall, and its consequences for the business.

AOL renegotiated deals with failing dot coms; and in a deal with eBay, booked all of the revenue generated from the resulting transactions as gross revenue, rather than simply its commission. AOL also scrambled to turn an arbitration settlement with a British entertainment company Wembley plc into an ad deal, lifting artwork without permission as it raced to put the ads online. $23 million that would have been booked as a special item was instead booked as advertising income. A similar deal was reached with TicketMaster, according to the Post.

Memorable phrase du jour belongs to O'Connor, who admits that revenue booked in this period was "not of the highest quality."

The Post promises further details - encompassing the complex Sun Microsystems/Netscape alliance - in a follow-up article.

Once again Google's experimental Sets feature - which astounded us by completing Borges' taxonomy of animals - has proved its value. (Thanks to KMS for the link). ®

Related Link
Unconventional Transactions Boosted Sales - Washington Post

Currency is stored value. Stable rules for stored value in a banking system are more reliable than gold, which is a yellow metal that conducts electricity well, but has no inherent qualities that would protect you against a collapse of government-run currency systems. If you think such a collapse is coming, better to buy hard assets that have a value related to survival needs: food, guns, ammo, land, etc.

No surprise.

This is AOL. The company that wrote off all it's retained earnings just before the recent boom began.

They'd been overestimating how long people stayed with AOL and booking revenue to correspond. Thanks to that, they were able to pretend that they actually had earnings.

But hey, more power to them. They timed the market perfectly. They turned a grossly inflated stock with okay profits into control of a vast company with real assets (TimeWarner). Bravo!

As I posted on another thread:

This story circulated right before 9/11, then disappeared from the radar screens:
AOL Is Still Selling Ads (To Itself)

"Equally pertinent, NetRatings estimates that in the month of July alone, about 80% of all online ads served over AOL Internet properties were bought or placed by AOL Time Warner or one of its subsidiaries. That means third-party advertisers bought only 20% of these ads."

There must be a mistake. Surely this didn't happen prior to Jan 20, 2001. Why the eight years of Bubbagate were the cleanest, most ethical period in US history!!!{mega sarcasm alert}

There's an article in this month's Scientific American about ol' turncoat Turner and his environmental activism. He owns hundreds of thousands of square miles of this country he despises. He is spending his cash on reintroducing near extinct speicies to his "ranches". BTW he owns the larget herd of buffalo {bison} in the world. Bison BS and Turner. Just a coincidence? Believe It or Not!!!!

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