That growth was a source of encouragement to some AOL shareholders.Parsons reiterated the company's revenue growth target of between 5 percent and 8 percent. The result was a $350 billion mega-corporation, AOL Time Warner, which held dominant positions in every type of media, including music, publishing, news, entertainment, cable and the Internet.Sign up now to learn about This Day in History straight from your inbox. But for long-term investors, it may not yet be time to write off this Internet trailblazer with one of the most enduring brands known on the Web. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. Beyond the accounting investigations, those hurdles include the unresolved talks with AT&T (T ) and its merger partner, Comcast (CCZ ), over their 27% stake in Time Warner Entertainment, a holding company for much of the Time Warner cable, film, and network assets. The company's publishing business -- which includes magazine titles such as Time, People and Money -- logged a 14 percent rise in earnings and a revenue gain of 3 percent.Parsons, who will officially take the reins of AOL Time Warner when Jerry Levin retires next month, blamed the first-quarter shortfall entirely on weakness in online advertising at America Online, which he said has performed even more poorly than expected since January.After posting a staggering net loss for the first quarter, the world's largest media company on Wednesday lowered its profit target for the year, citing ongoing weakness in online advertising sales at its America Online unit. Still, Goodchild sees "solid operating performance" across Time Warner and a dominant market share for the AOL service as reasons why a downgrade isn't necessary now.Parent company AOL Time Warner is trading at a market valuation of 7.3 times 2003 projected earnings, according to First Albany Corp. Take America Online's profits out of the equation and the Time Warner businesses alone are trading at 10 times next year's estimated earnings.
"I'm not really focused quarter-to-quarter. But the sales growth came from the addition of 492,000 subscribers in the three-month period -- not bad considering that most homes with a PC already have Internet access."America Online will be around a lot longer than many investors realize," says David Brady, portfolio manager for the Liberty Young Investor Fund, which has sold much of its AOL stake in recent months because of the accounting probe and other factors.
With its stock inflated by dot-com mania, AOL was worth $224 billion in today’s money back in 2000, just before it launched an audacious, expensive, and ill-fated bid to combine with Time Warner.