Once considered AOL Time Warner's most valued asset, the America Online division has suffered recently from a two-year slump in online advertising, which still shows little signs of making a strong recovery. While AOL initially held up better than many of its rivals, it is now suffering as a number of its lucrative multiyear advertising deals expire. (Interesting to me)
4/9/2002 7:09:57 PM
PALO ALTO, Calif. AOL Time Warner Inc (AOL) Tuesday intensified efforts to improve its weak Internet advertising business, putting longtime America Online Chief Bob Pittman back in charge of its Internet business and reassigning Barry Schuler to a new division.
Pittman, in a letter sent to employees on Tuesday, which was obtained by Reuters, said that the company's "highest priority" was getting the company's online advertising business back on track.
America Online in the first quarter saw a seven percent drop in advertising and commerce revenues, and a number of analysts have recently downgraded AOL Time Warner stock, citing its struggles in online advertising.
Pittman, who now serves as Chief Operating Officer-elect, will take over at the helm of America Online in a role he had held up until the company's merger last year with Time Warner. Barry Schuler, who has served as Chairman and Chief Executive of AOL since the merger, will now lead the new Home Networking Solutions and Digital Home Services division.
Once considered AOL Time Warner's most valued asset, the America Online division has suffered recently from a two-year slump in online advertising, which still shows little signs of making a strong recovery. While AOL initially held up better than many of its rivals, it is now suffering as a number of its lucrative multiyear advertising deals expire.
"It shows that they consider advertising the big issue at AOL," S.G. Cowen analyst Peter Mirsky said of the management shake-up. "I think there are a lot of big issues at AOL, but yeah, advertising is the biggest because if the advertising business comes back, it mitigates the other issues."
Analysts generally had good things to say about the changes, particularly Pittman's expanded duties at America Online.
"I don't have a clear explanation of what Schuler is going to do in his new role," said S.G. Cowen's Mirsky. "But his charge seems to be the creative guy who sits around thinking about new things that are going to make the company money. The long-term success of the company is going to be determined by its ability to offer content and services in the broadband world."
Pittman, in addition to his new hands-on role at America Online, is also due to become AOL Time Warner's sole chief operating officer in May.
AOL Time Warner shares closed Tuesday down 10 cents to $21.85, and are well below their 52-week high of $58.51. |
