AOL accounting practices under investigation

• Mar. 12, 2003

It appears that AOL has had yet another stumble in its efforts to grow, or at least maintain the status quo.

 

An investigation is ongoing by the US federal government into whether AOL allegedly worked with other companies to artificially inflate their revenues.  The creative accounting practices are said to have occurred before the merger with Time Warner.

 

The other companies include a real estate site Homestore Inc., which is also under investigation.

 

This widening investigation comes at a bad time for AOL/Time Warner as they were hoping to spin off a cable subsidiary.  In order to do this, they have to restructure the company and now this is not possible until the investigation concludes.

 

The investigation is also affecting their share prices which fell 6 percent to $10.46.  This is a far cry from the companies all time highest share price of $93.91 per share in December 1999.

 

Rob Sullivan

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