And you thought Jerry Levin was the big-picture guy at
AOL Time Warner
Meeting with analysts Wednesday to discuss
fourth-quarter results, Dick Parsons-- the man slated to replace Levin as CEO of the media and entertainment conglomerate -- told AOL-watchers that the company was fed up with supplying detailed financial guidance at the expense of explaining the Big Picture. Accordingly, as Parsons advertised, the company went on to offer little new or useful data in its postearnings conference call.
Alas, now might not be the very best time for managers to try dictating to investors what they should and shouldn't know. In the wake of
collapse, the market has grown even hungrier for information and even more skeptical of companies it believes are holding back in any way. And while AOL hasn't been the focus of any recent accounting chatter, its fundamentals look iffy enough to some eyes, considering the ongoing malaise in the ad market. AOL shares had slipped $2.52, or 9.4%, to $24.18 around midday.
Part of the company's hesitation to forecast undoubtedly stems from its failure to meet the 2001 financial targets it had loudly and confidently reiterated for two years -- a misstep for which the market has amply punished AOL Time Warner, as Parsons is well aware. AOL stock has now lost a quarter of its value since the company's Jan. 7 earnings warning.
But the bigger issue is most likely that the company's immediate financial future looks mighty dull, which isn't usually a fact companies prefer to support with abundant detail. AOL reiterated the 2002 forecasts it made earlier this month: Building off a new set of 2001 pro forma numbers, the company expects first-quarter revenue and
EBITDA to be "essentially flat" with year-ago levels. For the full year, the company expects revenue growth of 5% to 8% and EBITDA growth of 8% to 12%, excluding a looming $40 billion to $60 billion writedown.
With growth like that, wouldn't you want your investors to gaze at their navels and think deep thoughts rather than focusing on the bottom line?
Staying With the Program
In any case, Parsons and co-Chief Operating Officer Bob Pittman then put their long-term strategy to work, turning aside analysts' request for details regarding subscription and advertising targets. "We're going to sort of shy away from overemphasizing the granularity in the guidance we give going forward," Parsons said.
From the company's point of view, AOL Time Warner's desire to focus on the long-range view corresponds to the patience that Parsons preached in seeking a payoff from the synergistic content-and-distribution multimedia colossus that the merger of America Online and Time Warner created. "This happens over time," Parsons said in an opening statement. "Convergence is an evolutionary process."
And Parsons made it clear that in several areas, including the company's European expansion, he thinks people should have more leisurely expectations. "We live in America," he said. "And everybody in America wants instant results and instant gratification."
Especially, it seems, AOL Time Warner shareholders.