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allow me be candid....
Expect some sour AOL #s in today's investor chat
By Jeff Bercovici
It's probably not the coming-out party he would have liked for himself, but Richard Parsons, CEO-to-be of AOL Time Warner, will address investors today in a conference call, and he is expected to deliver a dose of unpleasant reality.
Parsons, who was named last month as the successor to outgoing CEO Gerald Levin, is expected to revise the optimistic earnings estimate that the giant media conglomerate gave Wall Street four months ago and has stuck with up until now.
Analysts believe that the prediction of a double-digit increase in earnings before interest, taxes, depreciation and amortization, or EBITDA, for 2002 will become a single digit increase after this afternoon's call.
Parsons is expected to use the conference as an opportunity to preview cost-cutting measures, such as layoffs.
His comments may shed light on Levin’s decision to surprise the business world with news of his retirement this May rather than provide plenty of advance notice, as Wall Street likes.
Many analysts interpreted his doing so as a sign that he knew bad news was on the way but preferred not to deliver it himself.
From Parsons’ standpoint, it may seem like an inauspicious way for a new chief executive to make his debut, but the nature of today's briefing is in keeping with his reputation as a straight-shooting, sober-minded leader who prefers to cultivate modest expectations.
That attitude marks something of a departure from the approach AOL Time Warner has taken with Wall Street in recent months.
As the media economy descended into recession early last year, company officials clung to their original target of 30 percent EBITDA growth for 2002.
That figure was eventually revised down to 20 percent, a number most analysts still considered unattainably high, given the flabbiness of the advertising market and the losses incurred in AOL Time Warner’s acquisition of AOL Europe.
Parsons' apparent willingness to own up to hard truths stands him in contrast to chief operating officer Robert Pittman, who was one of the voices insisting that the company was on track to meet its original goals.
In fact, some have suggested that their different styles may have contributed to Pittman's being shouldered out of the way by Parsons for Levin's job.
In addition to this levelheadedness, Parsons has also been praised for his talents as a negotiator and mediator who can bring parties with conflicting agendas into agreement.
This skill will obviously serve him well as he seeks to integrate the sprawling and disparate empires of America Online and Time Warner.
It may also help him in other, less obvious, ways--for instance, in winning him back the counsel of estranged AOL Time Warner vice chairman Ted Turner.
Turner, ever vocal, in power or out, for some time had been stinking up the mood surrounding the merger with personal attacks on Levin for shoving him out of the power loop.
Shortly after his ascension, Parsons declared Turner his man and said he wanted him not only not to leave the conglomerate but to again play an active role in helping run it.
Some cynics dismissed the gesture an an effort to shut Turner up. More knowledgeable cynics, appreciating that Turner never shuts up, no matter what the gesture, interpret Parsons' move as a shrewd effort to line up the right powerful allies as he assumes the helm from Levin.
January 7, 2002 © 2002 Media Life
-Jeff Bercovici is a staff writer for Media Life.
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