AOLTW BOARD MEMBERS EXCHANGE HIGH FIVES
CEO Gerald Levin told a gathering Friday that the combined company would meet the 2001 revenue and cash flow goals that it set when the merger was initially announced a year ago. The company's 2001 budgets are likely to be on the agenda at the upcoming board meeting.
The Federal Communications Commission granted conditional approval of the $106.3 billion AOL-Time Warner merger late Thursday (hitsdailydouble.com, 1/11). Shares dropped 2.3% on their first day of trading Friday as a combined company, then bounced back somewhat on Tuesday.
According to the conditions of the merger, Time Warner shareholders will receive 1.5 shares of AOL Time Warner for each share of Time Warner stock they own, while America Online shareholders will receive one. America Online shareholders own approximately 55% of the new company, while Time Warner's shareholders will own approximately 45%.
At the close of trading Friday, AOLTW shares were down $1.09, or 2.3%, to $46.14, after opening 2.3% (or $1.07) higher. U.S. stock markets were closed Monday in observance of Martin Luther King Jr. Day, but Tuesday saw the stock rebound slightly, closing at $46.70.
Analysts said the initial weakness likely reflected nervousness about the company's ability to hit aggressive growth targets it has set for this year, the Wall Street Journal reports.
On Jan. 10, 2000, the companies said they would have about $40 billion in sales in 2001 and about $11 billion in earnings before interest, taxes, depreciation and amortization, according to Bloomberg Business News. That included about $1 billion in cost savings and revenue from new initiatives. Some investors, however, doubt that AOL Time Warner will meet those projections, given the slowing U.S. economy and a decline in advertising sales, which will make up about 20% of total revenue.
Also on Friday, the company confirmed the makeup of the 16-member board. "The board of directors we are announcing today is one of the most outstanding in corporate America," Levin and Steve Case, Chairman of AOL Time Warner, said in a joint statement. "Our company's management team is looking forward to working with the directors as we embark on our mission of becoming the world's most respected and valued company."
In addition to Levin and Case, AOLTW's board includes Richard Parsons, Ted Turner and Bob Pittman.
In related news, AOL membership passed the 27-million mark this week, which means the service will likely pass the 87 billion smiley-face-emoticons mark by Presidents' Day.
(For more AOLTW news, see Rumor Mill.)
