AOL Shares Fall on Write-Down Fears

Shares of AOL Time Warner Inc. tumbled 9% on Friday on concerns the world’s largest media company may take another huge write-down of its assets and on a report that regulators may widen their probe of the company’s finances.

The company took a $54-billion charge in the first quarter--a record--to write down the value of America Online’s acquisition of Time Warner. Analysts have said more write-downs could come, resulting in another large charge next year.

Shares closed at $12.76, down $1.31, on the New York Stock Exchange.

The company stressed caution, attributing the first-quarter write-down to the decline in stock value of Time Warner between the time the deal was announced in January 2000 and the time it closed a year later.

“It would be premature and inappropriate to take an impairment charge at this time,” AOL spokeswoman Tricia Primrose said. “The review of such goodwill write-down will occur in the fourth quarter. I’m not going to speculate on the results of that review.”

Since the year began, AOL Time Warner shares have fallen nearly 60% on concerns of slowing growth of its America Online Internet service, the company’s difficulties in getting customers to pay for faster, more expensive Internet services and federal investigations into its accounting practices.

The accounting probe by the Securities and Exchange Commission could be broadened into an investigation of insider stock sales while the company was making rosy earnings forecasts, according to a report Friday in the Financial Times.

Fifteen senior executives and directors of AOL, including Chairman Steve Case and Chief Executive Richard D. Parsons, made profits totaling almost $500 million by selling shares between February and June of last year, even as the company repeatedly insisted it would meet ambitious earnings projections, the newspaper said.

“It certainly wouldn’t be surprising to see the investigation widen in this direction,” said Jeffrey Logsdon, an analyst with Gerard Klauer Mattison. “When you see stock sales compared to those early estimates, it’s a fair question to ask, ‘Who knew what and when?’ ”

Primrose said the company was fully cooperating with the SEC’s investigation.

The company lost credibility on Wall Street in September when it lowered revenue and cash-flow targets long after many of its peers acknowledged that an industrywide advertising slump would hurt their results. Logsdon said most Wall Street analysts had cut their expectations for AOL long before the company did.

Adding to the company’s woes on Wall Street on Friday was a report in the New York Times that said the SEC is looking into AOL Time Warner’s complex swapping transactions with Qwest Communications International Inc. and WorldCom Inc.