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Armstrong Turns AOL Into Late Night Joke

Stocks in this article: AOL IBM GOOG TWX MSFT

NEW YORK (TheStreet) -- Reportedly, new Tonight Show host Jimmy Fallon and AOL (AOL) CEO Tim Armstrong will earn the same amount of money this year, about $12 million.

Guess who's getting the bigger laughs?

That would be Armstrong, who made a fool of himself last week by defending a cut to employee 401(k) retirement contributions by blaming two "distressed babies" for the change.

Valleywag promptly delivered the world a chart showing Armstrong's salary and bonuses, measured in distressed babies.

The incident also brought back memories of last summer, when Armstrong fired Patch's creative director Abel Lenz during a conference call.

Speaking of creative directors, when MSNBC asked for someone at AOL to come on the air last week and explain the company's actions, they got David Shing, a "digital prophet" who looks like every father's nightmare of what his daughter might bring home, and who apparently speaks fluent gibberish.

Today, Armstrong has backtracked on the cuts, meaning nothing has been saved, but the damage has been done. Jimmy Fallon singing The Weight with the Muppets is funny and strangely touching. Tim Armstrong and AOL are officially hilarious.

What is amazing is how unforced the errors are. Lots of companies are switching from per-paycheck contributions to lump sum, year-end contributions on 401(k) accounts. IBM (IBM) is doing this. Asked about the move, Armstrong could have simply pointed to IBM.

Looking at the numbers, Armstrong should be riding high.

The company last Thursday reported net income of $36 million, or 43 cents a share, on revenue of $679 million for the December quarter, with revenue for the full year up 6% to $2.32 billion. AOL has successfully transitioned under Armstrong from a company dependent on dial-up revenues to a Web media and advertising company with a future.

Over the past year, the stock has gained nearly 37%.

But no one is crediting Armstrong with any of that, because his way of making headlines is so breathtakingly bad.

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