1. Checks and Balances at America Online

A big shoutout this week to Time Warner's ( TWX) America Online unit, for reminding us how fun -- and how fictional -- the dot-com bubble could be.

We're referring, of course, to Wednesday's announcement of a settlement between Time Warner and the Justice Department -- an agreement that puts some closure on an accounting investigation that has dogged AOL and Time Warner for more than two years.

As part of the settlement, which leads to a penalty and litigation fund totaling $210 million, the Justice Department included a fascinating chronology it calls a Statement of Facts.

This addendum outlines the case against AOL and its executives, and it looks like the backbone of a fraud case that Justice would have pursued in the absence of Wednesday's settlement. That fraud case revolves around AOL's relationship with the now-defunct business-to-business software company PurchasePro, which the feds allege inflated its revenue in 2000 and 2001 with the help of AOL executives. In return for their assistance, says Justice, AOL cut deals that inflated its own advertising revenue.

What we particularly like about the PurchasePro timeline is the spotlight it casts on the nitty-gritty details necessary for implementing an alleged accounting fraud.

For example, on or about March 31, 2001 -- just as the first quarter was closing -- Justice says three AOL employees demanded PurchasePro pay AOL $12.2 million in commissions supposedly due for AOL's sales of a PurchasePro product -- even though AOL was actually owed $6.7 million at most.

Because the money had to be received by midnight on March 31 to be recognized for the first quarter, says Justice, "a senior executive at PurchasePro personally delivered to AOL a hand written check for $12.2 million."

Not only that, but somebody fixed it so AOL's April sales of PurchasePro product could be backdated into PurchasePro's first quarter. Or, as someone at AOL explained in an email back then, "This is the scoop. During the week of 4/5 two Business Affairs employees had to make PurchasePro senior executive whole to help him make his numbers. $ 9M illion in subscriptions was something AOL employees put together."

Which goes to show you: Making your sales numbers is hard enough. Actually making them up is something else altogether.

2. A Whole Mess of Google

Boy, that was quick.

Early Knockout
Geico couldn't be a contender

Monday marked the beginning of the closely watched courtroom battle between Google ( GOOG) and Geico, the insurer owned by Warren Buffett's Berkshire Hathaway ( BRKA).

But by Wednesday, the trial was all but over. No contest. Like a heavyweight bout when Mike Tyson was in his prime.

At issue was whether Google violated trademark laws by allowing Geico rivals to buy ads that show up when Google users search for Geico.

Were it ruled a trademark violation, the losses to Google could have been significant. But pretty quickly, a judge ruled no.

Still at issue is whether Google should let Geico rivals use the insurance company's name in the text of the ads that show up. Geico says no. Google says that it doesn't want advertisers to do that.

Coincidentally, Berkshire said Tuesday that Microsoft's ( MSFT) Bill Gates was joining Berkshire's board.

Too bad for Geico that Gates didn't show up earlier, since the Master of Microsoft knows a little bit about courtroom warfare. A day late, a few billion dollars short.

3. We 'Half' Ways of Making You Talk

What's the true value of a merger of Sprint ( FON) and Nextel ( NXTL)?

We have no clue. And we believe that Sprint and Nextel don't have too good an idea, either.

Let us explain: Back when we first got into the financial reporting racket, a kindly man once sat us down to tell us a little secret.

The secret, he said, would come in handy anytime we learned that two companies had embarked on a venture in which they said they were splitting the proceeds on a 50/50 basis.

What's wrong with going in on something 50/50, we asked?

Nothing, really, he said. But when partners end up with a 50/50 split, he said, it's probably because they have no clear idea as to what the relative value of their contributions are to the joint venture. So they just split the take down the middle.

As a counter-example, he offered the situation of an actor and his agent. When an actor gets paid, his agent gets 10% of the money -- a reflection of the educated guess that when the agent negotiates a job and the actor takes it, the actor himself is contributing 90% of the value to the actor/agent partnership.

But 50/50? That means that neither party really knows what's worth what.

Which brings us back to Sprint Nextel. In announcing their "surprise" merger Wednesday, the parties were scrupulously even-handed in their description and execution of the deal.

Right Down the Middle
Sprint and Nextel go halfsies

The deal, they claimed, was that elusive creature known as a "merger of equals." By our calculations, however, it isn't: One the eve of the deal, Sprint's $37 billion market capitalization was about 11% larger than Nextel's, and Sprint's $50 billion enterprise value was 21% larger.

But nobody asked us. Shareholders from each company will end up owning roughly 50% of the merged company. The board will contain an equal number of representatives from Sprint and Nextel. There will be two co-lead independent directors -- one from each company. The company will have two headquarters -- one the former Sprint headquarters, the other, formerly Nextel's.

Now, we're sure the companies intend this arrangement to be a sign of how darn equal they are. But we look at it another way: Can't anybody around there make a decision? It's like asking a true/false question on a quiz and getting back the answer "All of the above."

4. DoubleClick Your Money Back

In corporate America, there's nothing like a little hardship to evoke a lot of hard cash -- for people in the executive suite.

Two weeks ago, for example, the folks at Merck ( MRK) took time out from their Vioxx-induced pain to implement what the company called a " Change in Control Separation Benefits Plan ." That way, 230 top executives -- at a company with 63,000 employees in all -- would be well-compensated if they were to be let go in the event the ailing Merck gets acquired.

Thank goodness! We were awfully worried about them.

This week, it was DoubleClick's ( DCLK) turn. The advertising services firm -- which spent much of the year disappointing analysts with quarterly results or announcing it had retained Lazard Freres "to explore strategic options" -- said Monday that it had implemented retention agreements for its top five officers.

Should they hang around for the next five months, most of them will get a $150,000 reward for their troubles -- in addition, of course, to their regular salary. Should they manage to drag themselves into the office for another nine months, they'll earn another $300,000. Should anyone get canned before then, his retention bonus will pay off in full.

So once again, the golden parachute is going to employees who have had the greatest opportunity already to construct their own safety net. Isn't that great?

Of course, we're sure that someone will argue that you have to be pragmatic about this. (DoubleClick itself declined to comment.) You have to assume, the argument goes, that these execs are self-interested and won't hang around DoubleClick unless the company makes it worth their while. And if these key executives leave, the whole value of the enterprise will suffer. So it's in DoubleClick shareholders' best interest to dangle these rewards in front of them -- as unfair as the arrangement might look.

Our response? If these are the executives who led DoubleClick to this moment in its corporate life, perhaps the company would be better off without them. We bet that more than a few DoubleClick investors would be interested in testing that theory.

5. Signoff of the Times

After nine years of trying to catch up with CNBC, Time Warner's CNNfn went off the air Wednesday.

But while the folks on the financial news channel tried to be all cheerylike as the end approached, we can't exactly describe CNNfn's shutdown as death with dignity.

See, one would think that if you're a financial news channel, you would make some sort of effort to structure your day -- even your last day -- around the opening and the closing of the financial markets.

After all, the kickoff of trading at 9:30 a.m. Eastern time and the closing bell at 4 p.m. marks the cycle that defines the financial journalist's day -- something akin to the morning and evening milking that define the life of a dairy farmer.

So how did CNNfn acknowledge the markets' inexorable cycle Wednesday?

Good Afternoon, America
CNNfn calls it a day

Why, it ignored it. The channel signed off at 2 p.m. Eastern time. Why? We're not sure -- a spokeswoman for CNNfn (well, for this week, at least) said only that the timing of the shutdown was due to "a number of factors."

You know, when we used to imagine broadcast journalists sticking it out in the face of adversity, we would remember Edward R. Murrow manning his microphone during the Germans' bombing of London.

But now all we can think of is a bunch of CNNfn staffers saying, "Oh, what's the point of hanging around 'til 4? If we're going to go out and drown our sorrows, why do we have to wait two hours more?"
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