AOL backs down over charge levels
Deal with SEC means substantially reduced write-offs
AOL has backed-down in a dispute with the US Securities and Exchange Commission, and has drastically reduced the amount it proposes to write off in "research costs" for a couple of acquisitions. Nor is this the first time AOL has had bean-counting difficulties. AOL spent $287 million on buying Mirabilis and Netchannel earlier this year, and initially proposed to write off most of this as "in-process research and development." Instead of this, AOL has now agreed to take only a $60.5 million write-off. After the adjustments, AOL's fourth quarter results, to June 30, were $7.1 million net on revenue of $792.3 million. This included a $17.7 million charge for settlement of a shareholder lawsuit over the previous bean-counting episode. Then, AOL had been deferring the costs of marketing programmes, thus producing rather better current figures than it would have otherwise. When it changed that practice after criticism from Wall Street, the historical numbers (from the period when it was expanding fast to meet the challenge from the Microsoft Network) turned out to be worse than the shareholders had thought at the time. ® Click for more stories
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