Warner. Aside from self-promotion, the synergies are still not there. Time Warner shareholders got the best of the deal, analysts proclaimed, because AOL was giving them stock worth 70 percent more than their Time Warner shares had been worth before. Today, it's obvious that Time Warner shareholders got taken to the cleaners -- unless they were smart enough to sell their stock when it peaked shortly after the merger announcement. Since then, the price of AOL stock has plunged from about $70 a share to $23.65. AOL stock is down 26 percent this year and 42 percent over the past 12 months (Knight, 2002, 2).
Put another way, a company that was worth $300 billion one year ago is now worth $100 billion today, and most large shareholders are beginning to file suit demanding that AOL be spun off as a losing concept. "So by rather perverse logic, you have to give AOL founder Steve Case credit. When Case found himself with a stock that was way overvalued, he did the smart thing: he spent it before reality caught up" (Knight, 2002, 2). On the other hand, there will be those who do not appreciate Case's "innovative management" and will probably call his act by other names.
An investment fact sheet described the company for potential investors in 2000 by quoting from several underwriters and market makers who explained that AOL-Time Warner, Inc. is a fully integrated, Internet-powered media and communications company. The Company was formed in connection with the merger of America Online, Inc. (America Online) and Time Warner Inc. (Time Warner), which was consummated on January 11, 2001 (the Merger). In fact, said that report, "never had there been a better chance for synergy between two entities" (Hoovers Online Analysis).
The word "synergy" doesn't exist in many older discussions of business or management (those that maintained businesses should only be valued for what they actually produce). Instead, the word comes into the busi...