July 18, 2002, 9:04 AM — Just days before Internet and media mammoth AOL Time Warner Inc. (AOLTW) is set to release its quarterly financials, published reports surfaced Thursday that the head of the troubled AOL Internet unit is poised to quit and that the company has made some "unconventional transactions" to boost sales.
AOLTW Chief Operating Officer Robert Pittman, who is also acting as interim head of the AOL Internet division, could quit any day, The Wall Street Journal reported in its online edition Thursday, citing sources familiar to the matter.
Pittman took charge of the flailing Internet unit following the departure of AOL Chief Executive (CEO) Officer Barry Schuler in April. According to the Journal, Pittman has been increasingly vocal about his unhappiness in the position over the last few weeks, noting the mounting pressure placed upon him to jump start the unit's growth. Last Friday, AOLTW confirmed that it had hired an executive search firm to help it find a permanent AOL head.
The company's board is set to meet today and is likely to discuss a management restructuring, the Journal said, that could see an elevation of Home Box Office Chairman Jeffrey Bewkes and Time Inc. Chairman Don Logan. The exact structural changes were not disclosed, however.
Meanwhile, the Washington Post reported in its online edition Thursday that in order to make up for a slump in the Internet advertising market, AOL boosted its revenue "through a series of unconventional deals." According to the Post, AOL converted legal disputes into ad deals, shifted revenue from one division to another and sold ads on behalf of eBay Inc. and booked the revenue as its own, among other unusual practices.
The Post cited its own review of hundreds of confidential AOL documents, as well as interviews with former company officials and business partners.
According to the Post, AOLTW issued a statement yesterday dismissing accusations of accounting irregularities, saying that all the transactions the paper discussed were "appropriate and in accordance with GAAP (generally accepted accounting principles)."
Despite AOLTW's assurances, the company's stock (AOL) dipped in premarket trading Thursday.