AOL Time Warner Takes Two Resignations

Departure of chairman signals emphasis on content over delivery; firm eyeing business broadband.

The upcoming departure of america Online Inc. luminary Steve Case from the chairmanship of AOL Time Warner Inc. is widely seen as a positive symbolic gesture for the telecommunications and media company—one that will likely signal the rise of content provisioning over access provisioning, according to industry insiders.

"While they have a lot of great servers and great switches all over the place, they dont have the pipe to the home or small business," said Jonathan Gaw, an analyst at International Data Corp., in Mountain View, Calif. "The company will become more focused on growing the bottom line, on looking at how to make money as opposed to envisioning what things will look like five years from now. [The approach] will be more short-term but more practical."

Case, who co-founded AOL, of Dulles, Va., in the mid-1980s, last week said that he will resign as chairman in May but retain a seat on the board. Case orchestrated AOLs $112 billion merger with Time Warner Inc. in January 2001, but the combined companies did not progress as the participants had hoped.

Cases willingness to step aside is a positive move for the company because it takes a potentially contentious discussion off the table, analysts said. While his departure likely signals a growing emphasis on content over delivery, the company is expected to continue providing unchanged Internet access services.

Despite AOLs early successes in the residential Internet access market, it has not made inroads in the enterprise market. "AOL enterprise e-mail was such a good enterprise tool, even AOL didnt want to use it," IDCs Gaw said.

With or without Case at the helm, AOL Time Warner is expected to move more aggressively into broadband for the small-to-midsize-business market. "AOL recently has been undergoing a lot of soul-searching and refocusing. Theyre looking for money where they can find it, and certainly small and medium-size businesses have potential," Gaw said. "A lot of AOL customers have been kind of anxious because they want to move to broadband, and they wonder if AOL is going to be there with them. I would say be patient. AOL is placing renewed emphasis on broadband."

In 2000, AOL, along with many technology companies, was riding high on the dot-com euphoria that defined much of the late 1990s. Record-breaking investment funding and skyrocketing market capitalizations were but two contributors to an atmosphere of almost limitless possibilities.

In 2000, Case persuaded Jerry Levin, Time Warner CEO, to sell. But as the dot-com era screeched to a stop, AOL was hit hard. Since January 2001, the combined company has seen its share price plummet from the mid-$50s to a hovering pattern just above $10.

The day after Case announced his departure, Walter Isaacson, chairman and CEO of CNN News Group, a division of AOL Time Warner, in New York, said he will be leaving the company as well.

Isaacson, who will leave the company before the summer, will become president and CEO of The Aspen Institute.