Beleaguered shares fall nearly 7% to close at $11.58
NEW YORK — AOL Time Warner stock plunged Friday as the conglom’s newly retopped management was unable to fend off a broader market swoon.The beleaguered shares fell nearly 7% to close at $11.58 the day after HBO chief Jeffrey Bewkes and Time Inc. topper Don Logan were promoted to what is effectively co-chief operating officer positions, replacing Robert Pittman. A dramatic 390 point plunge in the Dow Jones Industrial Average (to its lowest level since 1998) made it a tough day to gauge Wall Street’s reaction to the revamp. But changes clearly weren’t enough to buck the downturn after a volatile week. Bewkes and Logan are well respected in the media biz, but their shuffle came a bit late — AOL TW shares have lost 75% of their value since the merger was announced. And with Pittman out, there’s still no chief at America Online. That’s AOL TW’s most troubled unit and the one that weighed on the stock the most. There’s an almost paradoxical disconnect between the glowing reputations of Bewkes and Logan and investor haste to dump the stock. Class-action suit Philadelphia law firm Berger & Montague filed a class-action suit against AOL TW Friday on behalf of shareholders who bought securities between Oct. 18, 2000, and July 17, 2002. Suit could be the first of many as law firms look to cash in and stockholders hope to recoup losses. Reports of questionable bookkeeping, corporate excess and downright fraud across industries have spurred such lawsuits. Analysts, brokers and investment banks were the first wave, corporations likely to be the next. Johnson & Johnson was the latest corporate giant targeted by federal regulators, which are investigating possible accounting fraud at a plant in Puerto Rico. Sun Microsystems further spooked the stock market by a grim forecast as part of its quarterly earnings — despite reporting a profit. Investors have vainly sought to establish a floor for the market, and for AOL TW, as the shares fell in recent months from $20 to $15 to near $10. One investor figured the pre-merger Time Warner would be trading at $40. But now “the floor is wherever the market says it is.” Panic selling Panic selling that ripples from valid operational issues make it nearly impossible to predict how low a stock can go. In fact, research firm Soundview Technology downgraded AOL TW Friday to “neutral” from “outperform.” “Investors want nothing to do with stocks,” lamented one fund manager. With all the regulatory probes under way, he added: “Some of them say, ‘Get that stock out of my sight. I don’t want to hold a company that’s run by criminals.’ ” Others down, too Other media shares followed AOL TW lower. Viacom plunged 7.7% to $34.50; News Corp. lost 5.13% to close at $21.08; and Vivendi Universal dipped 2.2% to $17.32. The drop comes even as many see the advertising market waging a modest recovery. Wall Streeters fear that if stocks continue to fall, corporate ad budgets will be slashed anew, nipping a nascent recovery in the bud.
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