Posted on 01/31/2003 1:37:17 PM PST by Dog Gone
In "It's a Wonderful Life," Jimmy Stewart's character ends up on the bridge, weighing whether to end his life over lost money. Eight thousand dollars, to be exact.
Fast forward to yesterday. AOL Time Warner comes out and essentially tells the world that it lost some money in 2002. About a hundred billion dollars.
To his credit, AOL's CEO didn't blame his uncle. In fact, he made no excuses at all. They just lost US$100 billion. That's all. Now, let's move on. Fair enough. The future is the thing. But before we press forward, can we just have a minute to digest these numbers?
B-B-Billion?
To be truly accurate, the loss was $98.7 billion. Either way, it is the largest annual loss ever by a U.S. corporation. See? AOL is still making records. And the company is unlikely to squawk over a measly billion or three. So let's use the $100 billion figure.
True, the money isn't exactly lost in an envelope somewhere. The loss is only on paper, mostly -- impaired assets, the result of plunging valuations and the like.
But that's just it: If you're going to lose a hundred billion dollars, why not do it with style? What else could AOL have done with $100 billion? Let's play with this idea for a moment.
AOL says it has 35.2 million users of its Internet service around the world. Each of them could have been given $2,800. Or, keeping it close to home, all of AOL's U.S. users could have received a check (note to recipients: cash it quickly) for $3770 or so.
Generosity, Inc.
Why stop there, though? Why not distribute the money more widely? With about 270 million people in the United States, each of us could have received a check for about $370 in our mailbox, courtesy of AOL. That's about what most people got from the big Bush tax cut a couple of years ago.
With $385, we could all sign up for AOL for a year and a half -- and start the whole cycle over again.
What else will $100 billion buy you? A war with Iraq, apparently. Democrats in Congress last fall came up with a war price tag of $93 billion, so you could even keep $7 billion around to pay bonuses to the winning generals.
Where's the Iceberg?
Of course, many people -- not AOL employees or shareholders, mind you, but a lot just the same -- take great pleasure in this mess. AOL was the shining star of the Internet economy, the dot-com that rose from nowhere to buy one of the largest media companies in the world.
But now, suddenly, no one wants their name used in the same sentence as AOL. Ted Turner, gruff, confrontational old curmudgeon that he is, decided it was safer to swim for shore alone than to stay aboard the sinking SS AOL. He's got his UN donations to oversee, after all.
You think it's a coincidence that Turner dated his resignation letter Tuesday, 24 hours before the colossal losses were announced? Or that former chairman Steve Case lit out two weeks ago? (Case, by the way, reportedly sold about $700 million worth of AOL stock over the past decade. Poor guy: He's not even to the billion-dollar cashout level yet).
Laughing Matter
It's official. AOL is now at least part farce. A fantastic experiment gone horribly awry. There's no way around it.
In fact, AOL blew a great chance to turn its losses into a good thing. Instead of sending a suit-wearing CEO to deliver the bad news, AOL should have had Austin Powers bad guy Dr. Evil reveal its annual loss to the financial community via satellite link-up from his evil lair.
Reporter: "How much did your evil empire lose in 2002?"
Dr. Evil: "One hundred b-i-l-l-i-o-n dollars."
That way, when everyone laughed, the poor folks at AOL could have kidded themselves into believing that everyone was laughing with them, not at them.
Now its equal to what Daschle wants to give us.
Great post. A billion here a billion there, pretty soon you're talkin' some series cash.
Well, if they get fired, they can look forward to promising careers in Congress...
And how does that differ from what the Treasury does?
this isnt the first time he screwed AOL - its the second. THe first was in the early 90's.
Well, we had a Bush running up our debt in the late '80s ~ early '90s as well. So I guess there's a second time for everything.
Allot of Internet people I talk with hate AOL. They hate them for selling non-existant web access (they were finally sued for that one) and for a general lack of local access numbers when they were one of the only games in town. They hate them for their propritary software and they hate them for the per-minute fees that astounded many users (rightly or wrongly) when they got the bill.
Internet savy people seem to have long memories when it comes to companies screwing them (or companies they perceive to be screwing them) and they remain bitter. I've never seen anything like the hate for AOL and MS anywhere but on the web. You can almost taste it.
It's no wonder that AOL only has 35 million users the world over. They were hated from day one and, as far as I can tell never were anything more than just another ISP.
I do know allot of people who began with AOL though, practically everyone who I know who uses the internet started out with it... but then they chucked it for the reasons described above.
So it seems they got what they wanted, they got people to try their product. It just wasn't good enough to stand up to the competition.
So they built up a base of 30,000,000 dial-up users that were paying an average of $15 a month. That translated to over $5 billion dollars in annual revenue just on subscriber fees alone. Wall Street went wild.
But the handwriting was on the wall five years ago. The AOL service was crappy with no prospect of getting better. The majority of the customer base were old grannies who didn't have a clue computer-wise. Their children and grandchildren set them up with AOL so they could send her e-mail and not feel guilty about not visiting anymore. They set her up with AOL because it was the cheapest and simplest online solution available and besides, they didn't have to use it, and "granny" didn't know better.
Well as cable modems become more and more prevalent, people are dropping AOL and not coming back. Fewer people are signing up for AOL. While the subscriber base is still holding steady, it is no longer growing. And all indications are that it is on the verge of collapsing and taking AOL on that final death spiral.
Once you get a cable connection - a fast, clean, uncluttered always-on connection to the Internet - there is no going back to AOL. Even for those who didn't know any better. AOL is in deep trouble.
I used the ones I got as coasters.
Oh absolutely.. Their business model seemed (to me at least) to rely almost solely on people who didn't have a clue. (But once they got a clue, they split like the house was on fire)
For the complete, total beginner it's perfect.. Just put in the disk, what could be simpler?
People progress through the newbie stage pretty fast though.. (especially after a hige bill for "online minutes") I think their ability to learn completely blindsided AOL.
I think I got about 370 CD's in my mailbox from them so far.
Only have two as conversational coasters, the rest go to the range. Got a v8.0 in the mail last week that will impersonate a collander on the next range trip.
I kept AOL way longer than I should have, mostly because I'd established my e-mail address on there and didn't want to change it. Ditched it last spring when I got DSL. Now, most of the people I know who still have it are getting ready to ditch. What AOL does still offer are some communities (similar to FR), but the corporation is consistently hostile to them--they take up space and don't buy stuff.
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