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There Must be a Pony in Here Somewhere 199

Posted by timothy from the buck-up-little-camper dept.
Alex Moskalyuk writes "It was supposed to be a deal of the millennium. When it was leaked to the media from the highest ranks of America Online, the journalists wanted a second source. It was just too incredible to believe, too likely to be a prank. AOL was merging with Time Warner with the terms of the deal making it more of a buyout than an equal merger. In truly Orwellian fashion, two corporations decided to treat one another as equals, although executives of newly formed AOLTW somehow always referred to the AOL part as "innovative" and thus leading into the future, while the TW was "old media" with that implies. Read on for Alex's review of a book about how that deal came to be, as well as its aftermath.
There must be a pony in here somewhere
author Kara Swisher
pages 320
publisher Crown Business
rating 6/10
reviewer Alex Moskalyuk
ISBN 1400049636
summary The AOL Time Warner debacle and the quest for the digital future

Kara Swisher's There Must be a Pony in Here Somewhere is subtitled "The AOL Time Warner debacle and the quest for the digital future." Debacle is not an over-exaggeration, as the chapters of the book unveil personal, professional, corporate and political dramas happening during the so-called merger. A reporter for The Wall Street Journal, Swisher knows many AOL executives personally, and according to her stories, frequently engaged in lively conversations conducted where else but in AOL Instant Messenger, available on PCs of top management and board members as the preferred means of communication.

The title of the book takes roots from a famous joke, attributed to Ronald Reagan, where a hopeful boy is dealing with a large pile of manure. When asked why he is so insistent about digging the pile with such enthusiasm, the boy replies that with such a pile there "must be a pony in there somewhere." If you read the press lately and followed AOLTW's stock ride, you probably know that the pony wasn't quite there.

It's amazing how many optimistic forecasts and wide smiles were presented to the press and general public on the day of the merger and long after it. The word "synergy" could qualify for the most popular noun of the year, used by AOL executives almost in every sentence.

As Swisher writes on page 18, "Most people involved in the deal seem to be suffering from a peculiar amnesia now, so it's easy to forget that kind of hype and optimism. Today, almost everyone near to this toxic merger runs screaming from it in an attempt to avoid any culpability. The denials come fast and furious: Not me. I wasn't involved. I thought it was wrong from the very beginning. And - most of all - Steve Case is a big, fat loser. This was always more familiar territory for me, since that was exactly how most of the world regarded Case throughout his career. For most of it, he had always and forever been a loser."

Well, you can tell that the author is not sucking up to AOL's ex-CEO.

Swisher's book is extremely personal. Unless you've been involved in AOL or Time Warner personally, you are probably not aware of the company's management. At the time, when executives of Yahoo, eBay and other Silicon Valley startups weren't just visionaries, they were cool, AOL's top management was rather bland and plain. They weren't the cool guys, they were just managing some dial-up ISP in Dulles, VA that somehow took over the United States with its goofy icons, goofy commercials, goofy sounds and likewise membership. The author takes you through the personalities of top managers, talks about the AOL-TW off-standish behavior towards one another, questionable deal and threatening techniques used by David Colburn and AOL's Business Affairs department.

The book is easy to read and is full of interesting details. For example, the day when the deal was announced, there was another company discussing potential merger with AOL. But since everyone was involved on Time Warner deal that was supposed to be "huge," Meg Whitman and eBay crew got almost no attention from America Online, with executives constantly leaving the room and portraying an attention span of five-year-olds. Perhaps if some executives paid more attention to eBay and discuss potential buyout, the Internet would look different nowadays.

Otherwise, the book looks like a classic business study on how failures happen and what to avoid when you are faced with the task of running world's largest media outfit. It's an easy and pleasant read, informative as well as entertaining. Don't expect technical details from it in regards to AOL's operations, load balancing and nationwide dial-up network, since Swisher's main audience is business types and readers interested in details behind the "deal of the millennium". The first chapter of the book is available online on New York Times Web site.

You can read more of Alex's reviews of business and technology titles. You can purchase There Must be a Pony in Here Somewhere from bn.com. Slashdot welcomes readers' book reviews -- to see your own review here, carefully read the book review guidelines, then visit the submission page.
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There Must be a Pony in Here Somewhere

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  • Why 6/10? (Score:2, Insightful)

    by Anonymous Coward
    Just read through the review and I just thought I'd point out that this may be the first time I've seen a review here get a rating below 7. And was the reason it wasn't given a higher rating because it wasn't quite what the reviewer expected? I thought of that after reading: "Don't expect technical details from it in regards to AOL's operations"

    • Re:Why 6/10? (Score:4, Informative)

      by prostoalex ( 308614 ) * on Wednesday May 05, 2004 @02:08PM (#9065868) Homepage Journal
      6 out of 10 is "okay" in my book. If I like it and want to re-read it some time later, it's probably 8-9. If it's outstanding, it's 10. 6 means "pretty good, room for improvement" as my English professor would say.

    • Re:Why 6/10? (Score:5, Interesting)

      by An Onerous Coward ( 222037 ) on Wednesday May 05, 2004 @02:40PM (#9066183) Homepage
      My old physics teacher once told us a story about how his mathy brain fails to mesh with the rest of the world. He had cable installed. The repairman came in, got him up and running, and left. About a week later, the cable company sent in a survey asking him how the repairman did.

      He thought, "Okay, the scale is 1-10, meaning 5 should be around average. I think I got better than average service." Then he proceeded to fill the survey with 7's and 8's.

      A couple more weeks go by, and he gets a call from the cable company, apologizing for the poor customer service he received and asking if there was anything they could do to make him feel better.

      I'm not totally sure I remember the punchline correctly. However, I think after about forty minutes of trying to explain why "7" wasn't a bad thing under a normal gaussian distribution, he broke down and asked for a month of free cable just to end the phone call.
      • I get the same thing whenever I bring in my Mazda for a checkup. The repairmen always beg me to fill out the corporate survey with all 10's. If it's not all 10's, they get in trouble or something. It's a good way to get great service ;)

      • Re:Why 6/10? (Score:5, Interesting)

        by Kphrak ( 230261 ) on Wednesday May 05, 2004 @02:59PM (#9066410) Homepage

        Giving a score, and then completely invalidating it by demanding perfection in it, is used by a lot of organizations. It perfectly captures the underlying evil behind managerial "rah rah we're a team and we're the best" thinking.

        Kia Motors does this. When you buy a car or get service, you're warned to give full marks (10/10) across the board if you want the guy who changed your oil to keep his job. In fact, although Kia calls you independently to get the scores, if you give anything under 10, the desk operator will ask you, "Do you really want to do this? The person who helped you will be fired if you don't give the 10."

        Col. Hackworth, a US expatriate (and badass) who does a lot of writing about bullshit in the Army, mentions that this kind of thing got added at one point (around the early 60s) where every soldier had to be a perfect marksman on pain of being demoted. The way soldiers would get around this was by having a buddy stick holes in their paper targets with a pencil indicating perfect shots.

        That cable installer who put in your physics prof's cable was most likely fired instantly, just because your prof understood statistics and not managerial politics.

        • We have an evaluation that we fill out for our professors at my college that goes to the Reappointment, Promotion and Tenure committee. This apparently happens on these sometimes, too. You're given about 20 statements like: The professor answered questions well, etc. and asked to rate them on a 1-7 scale: 1 very strong disagree, 4 neutral and 7 very strongly agree. A better than average class gets a 5/7 in my book, and I've only given one seven in my four years here. But I recently talked to someone wh
          • I also don't think that at a tech school "low" scores would have the same effect.

            Don't be too sure. Managers seem to always end up acting like managers, regardless of whether they're administering a school or running a car dealership. Like programmers, there are good ones and bad ones. And like programming, bad managers blindly follow management trends -- firing the bottom 10% because it worked for Jack at GM; giving attaboy awards makes up for a total lack of cash bonuses, etc.

            Just be thankful your

            • Well, luckily, most of our administrators are tech people (former Engineers and Chemists mostly), and even then the Reappointment, Promotion, and Tenure committee is populated mostly by other professors - rather than administrators - who don't want to be treated badly themselves when up for that promotion to full professor. Even full professors have a vested interest in keeping other good professors around rather than constantly "firing" (or turning down people for tenure is the equivalent I suppose) good
      • First thing I think of is the tomatometer [rottentomatoes.com] rating for games. Fresh games are rated at least an 8 (instead of 6 for movies), otherwise most games would be recommended.
      • "He thought, "Okay, the scale is 1-10, meaning 5 should be around average. I think I got better than average service." Then he proceeded to fill the survey with 7's and 8's.

        I had a similar experience with a pizza company. I had actually recieved excellent service. They even anticipated something I had forgoten to ask for. I thought I was paying them a high compliment by giving them a 9 out of 10.

        Needless to say, they did not see it that way. I recieved a personal call from a customer service represen

      • Well, what sorta bugs me is that this kind of inflating scores has crept everywhere. E.g., let's take something fairly neutral for most people: game reviews.

        Well, except for some fanboys who'll foam at the mouth if you gave their idol's game only a 99% rating. Bonus points if they haven't even played the fscking game yet, but they just _know_ it's a perfect 100%.

        I've seen for example a review on a major review site, for an overhyped game that I truly hated. The reviewer went to great lengths to demolish e
  • Time Warner got fucked
    • More precisely, Time Warner's pre-merger shareholders were, and AOL's pre-merger shareholders got a massive gift.
    • Why did you give away the ending! I was only halfway through the book!!

      Fine. I'll just go off and read some Agatha Christe.

    • Re:The aftermath in a nutshell (Score:5, Insightful)

      by edwdig ( 47888 ) on Wednesday May 05, 2004 @03:00PM (#9066412)
      Pretty much everyone involved in the deal did, other than people who traded the stock at the right time.

      Before buying Time Warner, AOL was buying up companies making technology important to them, such as Netscape & WinAmp. They didn't want to be dependant on anyone.

      Time Warner didn't care about any of that stuff. They were content letting other people deal with those issues, and just providing the content.

      The two merged, and really didn't mix well. Everything stagnated, and they blamed each other for the fall. AOL really only had one product, so when that started to lose popularity, they took all the blame, and Time Warner took over the company and tried to distance themselves from AOL as much as they could.

      Ted Turner pretty much lost any power he had, and things he used to own went down too. The Atlanta Braves have had a huge cut in payroll. WCW was sold off for peanuts to WWF (now WWE) - supposedly just the wrestling rings and other equipment alone was worth more than the total sale price. WWE is making a lot of money selling DVDs made from the video footage they got in the deal.

      Netscape got left to die a slow death, before finally getting killed off last year.

      NullSoft hasn't been allowed to do anything interesting.
    • More precisely, Time Warner drove AOL straight into the ground.

      These were two radically different corporate cultures. The two companies were supposed to supplement each others strengths. However, they merely combined each others weaknesses.

  • Worst Merger Ever (Score:5, Insightful)

    by Ars-Fartsica ( 166957 ) on Wednesday May 05, 2004 @02:06PM (#9065838)
    That is all that can be said of the AOL/TW debacle, the worst merger in history.

    You have to hand it to Steve Case though - how we managed to convince the world's most powerful and valuable media empire to sell its soul for a dialup ISP with a proprietary service is truly one of the great feats of negotiation in business history. AOL would be trading for $2 now if not for Case convincing Levin to impale TW shareholders.

    • Re:Worst Merger Ever (Score:4, Interesting)

      by Vlad_the_Inhaler ( 32958 ) on Wednesday May 05, 2004 @03:26PM (#9066659)
      the worst merger in history

      It was not that spectacular, what about the Burroughs/Sperry merger? Compaq/Dec (or was that a takeover?), and those are just some of the IT ones which bombed. A seriously nasty one was when Swissair took Sabena on - the black holes in Sabena's books drove Swissair bankrupt.

      AOLTW was just a good bit of Dotcom business, a totally overvalued company took advantage of that valuation to buy some serious real-estate. Nothing special, apart from the sums involved.

      • Re:Worst Merger Ever (Score:3, Interesting)

        by Phroggy ( 441 ) *
        Earthlink/Mindspring? I worked for them shortly after the merger; it was a mess. A bunch of Mindspring people wanted to defect and start their own ISP called SpringHeads, which would have been pretty cool, but of course that was mostly just a dream...

        Mindspring was once cool enough that they allowed drinking (yes, alcohol) at work, although that policy changed for legal reasons. Employees were generally happy, and their customers LOVED them. They were respected among techie people, and widely used by n

    • Re:Worst Merger Ever (Score:5, Interesting)

      by The Lynxpro ( 657990 ) <[moc.liamg] [ta] [orpxnyl]> on Wednesday May 05, 2004 @04:13PM (#9067085)
      "You have to hand it to Steve Case though - how we managed to convince the world's most powerful and valuable media empire to sell its soul for a dialup ISP with a proprietary service is truly one of the great feats of negotiation in business history. AOL would be trading for $2 now if not for Case convincing Levin to impale TW shareholders."

      Your statement lacks scope. Time Warner failed every attempt at getting the internet "right." The very expensive "Full Service Network" in Orlando was considered a failure. Time Warner's "Pathfinder" portal was not a top destination for web surfers. Not to mention you had the history of Atari's "failure" coming from the Warner side of Time Warner.

      Compare that to AOL. AOL (or so they thought) understood the internet. This was the company Microsoft was scared of. They owned Netscape. Nullsoft WinAmp. ICQ and AIM. Digital Cities. Mapquest. Early investor in many technologies like TiVo, and shareholders in Amazon.com and eBay (and they had first right to acquiring both companies).

      AOL had a problem getting into broadband because all the cable companies blocked them. AOL needed Time Warner Cable. Time Warner needed a coherent online strategy that AOL could provide them. The deal made absolute sense. And furthermore, AOL as an outsider who understood the new economy could go over the heads of the various fiefdoms that remained fiercely independent since the original Time and Warner merger, not to mention the acquisition of Turner Broadcasting shortly thereafter. AOL was to deliver the "synergy" that even Steve Ross could not deliver from the original merger from 1989/1990.

      And what do we have now? Short-sighted Time Warner executives calling the shots. The very same executives who failed to encourage the FCC and FTC to force open Comcast's pipes during their acquisition of AT&T Broadband. So AOL is having to go after add-on services to other broadband customers because none of the cable companies will allow them first tier billing. Even Time Warner Cable shafts AOL and pushes RoadRunner which is co-owned by Microsoft. Lay the blame for the failure of synergy at the door of Time Warner, not AOL...

    • Keep in mind, Time Warner has a history of buying high and selling low with computer companies. Anyone remember a little outfit called Atari?

  • Not cool guys? (Score:4, Insightful)

    by Neil Blender ( 555885 ) <neilblender@gmail.com> on Wednesday May 05, 2004 @02:06PM (#9065846)
    Most of the dotcoms managed by 'cool guys' failed. There was far too much emphasis on 'being cool' than having a realistic business model.
    • There is nothing more important than being cool, not even success in business. AND DON'T YOU FORGET IT.

  • Orwellian? (Score:3, Insightful)

    by kalidasa ( 577403 ) * on Wednesday May 05, 2004 @02:07PM (#9065864) Journal
    Orwellian in which sense, language being distorted to control people's thoughts, or ubiquitous surveillance?

  • How it happened, in a nutshell (Score:5, Insightful)

    by Glonoinha ( 587375 ) on Wednesday May 05, 2004 @02:07PM (#9065866) Journal
    Simple, same thing that happened at HP / Compaq : greedy asshats at the helm that are able to make a gazillion dollars while destroying two companies in the process, destroying the shareholder value of those two companies in the process. Ask Carly about that one, and Mr. Case.

    • But Case -saved- AOL (Score:5, Insightful)

      by Ars-Fartsica ( 166957 ) on Wednesday May 05, 2004 @02:11PM (#9065910)
      I think you want to compare Carly to TW's Levin. For Case, the merger was a masterstroke. AOL would be in the gutter now if it hadn't tethered itself to the world's most valuable media company. It is pre-merger TW shareholders who should be out for blood, not pre-merger AOL shareholders.
    • He's accurate and on target. the AOLTW disaster is bad, but the horror Carly has visited upon HP is also going to be book-worthy.

      After Carly's idiotic invasion of Compaq, long term employees at HP LOST a week's vacation. Then she set the pay curves to match Compaq's saving the company millions (true) but basically condemning thousands of employees to work at HP for the rest of their days with little hope of ever getting another raise. In the meantime, Carly stuffs her greedy pockets with millions in cash

  • New AOL/TW Sound... (Score:5, Funny)

    by axis-techno-geek ( 70545 ) <rob&goshko,ca> on Wednesday May 05, 2004 @02:08PM (#9065872) Homepage
    >>ding<< You got screwed!

  • AOL/TW in the movies (Score:4, Funny)

    by Equuleus42 ( 723 ) on Wednesday May 05, 2004 @02:08PM (#9065873) Homepage
    Every time I saw AOL's name at the beginning of a movie, I shuddered... I think even The Matrix was a victim of this...
    • Actually I kinda got a kick out of that. The opening sequence where they show the Time Warner logo and all has been subverted, so to speak, turned the green hue that all the matrix shots had. In The Matrix, it says, "Time Warner", in Reloaded it says "AOL Time Warner" with even more ominosity, and by the time Revolutions came out they had dropped the "AOL" from the time.

  • I remember when the merger was announced (Score:5, Interesting)

    by FunWithHeadlines ( 644929 ) on Wednesday May 05, 2004 @02:08PM (#9065877) Homepage
    ...and my jaw literally dropped when I realized it was more AOL buying TW than the other way around. That was when I realized the dot-com boom was very, very real and that things were not the way they were. Time Warner is beyond huge, so to have AOL swoop them up was incredible. I had older relatives who had been in the media business, mostly on the news side, and they were stunned too for they knew how big TW was but had little idea of this new AOL "thing."

    Of course it turned out all to be a stock thing. AOL stock, at the time, was high-flying, and TW stock was looked down upon as this underperforming, boring old line stock. AOL would give TW a facelift for the 21st-century, and both sides would benefit from that 90s buzzword "synergy."

    Ha! From trying to force TW staffers to switch internal mail systems to the laughable AOL mail system, to conflicts on the board level, to a failure to find true value out of the synergy, and then the stock market collapse, followed by the fleeing of subscribers from AOL, it was not to be. Now AOL/Time-Warner is back to being Time-Warner, the old line guys are getting revenge on the dot-com upstarts, and the whole thing seems like a bad idea gone wrong from the start.

    Which it was.

    • Re:I remember when the merger was announced (Score:5, Insightful)

      by HyperbolicParabaloid ( 220184 ) on Wednesday May 05, 2004 @02:19PM (#9065982) Journal
      I had a similar reaction. I view the AOL/TW merger as akin to money laundering.
      During the dot com boom, the smart business people HAD to know that those companies were wildly over valued (PriceLine.com was worth more than the entire airline industry!). Steve Case prudently turned some of his play money into real money buy buying an actual, productive, fairly valued company.
      And thats what money laundering is: turning dirty money into clean money.
      • Except for the fact that there is nothing "dirty" about stock gains. Your analogy is seriously flawed.

        Capital appreciation (stock gains) is, in the short term, tied directly to perception but over the long term, it more accurately reflects the real underlying value of the company. Nowhere in any of the many many finance classes I took for my MBA, can I find any reference to dirty money laundering being compared to stocks. Yes, fraud exists for sure, but I don't think you are suggesting that. You hav
        • I never suggested that there was anything the least bit illegal about the merger. And your MBS classes are right, just like in my CFA training. The dot com boom and bust clearly demonstrate that PUBLIC perception diverged wildly from actual underlying value. I'm sure some dot com entreprenuers didn't really get this, but many must have, including Steve Case.
          My analogy does not depend on AOLs stock value being illegal; it depends on Steve Case knowing that AOL stock was of limited value: eventually it wou

    • Living well is the best revenge. (Score:5, Insightful)

      by Tackhead ( 54550 ) on Wednesday May 05, 2004 @02:34PM (#9066122)
      > Now AOL/Time-Warner is back to being Time-Warner, the old line guys are getting revenge on the dot-com upstarts, and the whole thing seems like a bad idea gone wrong from the start.

      First off - yes, the merger made no fucking business sense whatsoever.

      Watching it unravel was a great window into two disparate (and ultimately, mutually-exclusive) corporate cultures interact.

      The most telling example was the reaction of "West Coast" (AOL/dotcom) culture with "East Coast" (Time-Warner/traditional media) culture when it came to what to do with their respective stocks/options.

      West Coast culture says "W00hoo! The business rationale for this is pretty silly, but look at our stock price! People actually believe the hype. I could cash in my options and have fuck-you money [salon.com], plus a few shares left over in case things work out. AWESOME!"

      East Coast culture says "This is huge... but you can't just cash in your options -- that would take away your only motivation to make it work! Everyone'll look at you funny. Where's your loyalty? This kind of thing could get you kicked out of the country club! How could you?" (Or for 95% of East Coast employees, "What are these 'options' things again? And why do these West Coast people all seem to have them, and why are they so happy? I thought you had to be in a country club to do that sort of thing!")

      OK, I'm stereotyping both the East and West coast cultures here, but you get my drift. When the worldviews of two sets of employees are that far apart, and especially when things start to go wrong, you're going to end up with a lot of bitterness from the boardroom on down, and such a merger is a recipe for disaster even when it does make business sense.

      Was the merger a disaster? Sure. Are the old-line guys back in charge? Yup. But who really won? I'd argue that the AOL shareholders are the winners here, regardless of who's in charge of rehabilitating the broken down shell of the media giant.

      • Although I agree with your stereotypes of east vs west (I'm an admitted east coast bigot), the fact is that AOL was an east coast business based out of Dulles, Virginia. That aside, us east coasters get a kick out of the "dudes" out west and how they do things. (just teasin' y'all)
      • The most telling example was the reaction of "West Coast" (AOL/dotcom) culture with "East Coast" (Time-Warner/traditional media) culture when it came to what to do with their respective stocks/options.

        AOL is headquatered in Northern Virginia. Hardly "West Coast".

  • Who here read the review mainly because of the title?

  • Any details about the AOL CDs? (Score:5, Funny)

    by GillBates0 ( 664202 ) on Wednesday May 05, 2004 @02:10PM (#9065901) Homepage Journal
    The book is easy to read and is full of interesting details.

    Hope they didn't miss out important details about the AOL CDs. Were there lively debates about what to call the new CDs? Does it say which smart aleck decided to do away with the jewel boxes once they realized people were picking up thousands of CDs just to keep use the nice jewel cases and replaced them with shitty cardboard covers?

    I'd buy the book if it had notes and chapters about AOL CDs.

  • did you know that... (Score:4, Informative)

    by Kiro ( 220724 ) on Wednesday May 05, 2004 @02:21PM (#9065997)
    Well, you can tell that the author is not sucking up to AOL's ex-CEO.

    you mean, the CEO that in 1998 gave 8$ million to a christian school where they "cure" homosexuals?

  • The Power of Time Warner (Score:5, Interesting)

    by pararox ( 706523 ) on Wednesday May 05, 2004 @02:26PM (#9066048)
    The Columbia Journalism Review has made this interesting report [cjr.org] available. It shows the depth/breadth of media formats that Time Warner has control of. It's quite astounding, check it out.

    -pararox-

  • Steve Case is a genius (Score:5, Insightful)

    by jdcook ( 96434 ) on Wednesday May 05, 2004 @02:27PM (#9066052)
    I'm a big believer in the standard counter-intuitive line on this merger: The merger is only a debacle if you were a Time-Warner share holder. The AOL people converted "assets" backed by nothing to shares in a company that actually owned stuff. And they did it by capitalizing on the ridiculous value of their stock at the height of the bubble.

    Every AOL shareholder who wasn't smart enough to sell near the top of the bubble should fall down on their knees every day thanking Steve Case for preserving as much of that value as possible.

    • I recently took a ATV tour around some farms in Kauai. Gorgeous place. It has a Star Wars missile defense research facility, and other areas that remind you that it isn't an unspoiled paradise.

      But nothing made the pit of my stomach fall farther than when the Hawaiian tour guide brought us up to a fence and made a huge gesture with his arm. "All this land here, over 5,000 acres, was bought as a private estate by Steve Case."

      Just remember, his money laundering brought him enough money to buy a huge portio
      • FYI, most of Hawaii is owned by one of several land trusts. Dole and the Bishops are two of the bigger ones. Beyond the beaches and than the military reserves there isn't a lot of government owned land there. Of course the Bishop land funds the Kahmehahmeha schools and those aren't all bad. Case wasn't really laundering money, he just got the long end of the stick from TimeWarner (as well as all his company's shareholders).
      • ummm....what crime? You're saying that he should have violated the law and NOT sought to increase shareholder value? He was employed by the shareholders and was LEGALLY required to do the sort of thing he did. If you don't like it, then take up the issue with the US Congress. I don't like it either, but he not only has done nothing illegal; he has done what was required of him BY LAW.

        BTW, the reason rich people buy 5,000 acres is because they don't want people despoiling it. In the middle of it, instead of
        • Or 5000 acres divided into a housing development consisting of 20,000 quarter-acre lots each with a tract home.

          • Or 5000 acres divided into a housing development consisting of 20,000 quarter-acre lots each with a tract home.

            And, they'll all get taxed multiple times for having 5 street addresses per house.
        • I was using the term "punishment for his crime" in a sarcastic manner. He didn't commit any crime, as another poster pointed out, he converted speculative value into real value. He cashed out of a bubble. And, as another poster stretched the analogy, converting 'dirty' money into 'clean' money is laundering. Personally, I don't consider doing acquisitions for stock using 'dirty' money - it's just business. Time Warner got jobbed.

          As to your 2nd point, it's moot. As the other poster pointed out, most land
          • Its just another example of how a system that is supposed to serve humanity is exploited.

            'Winning' the game is more important than whether or not the dynamics you used to win contribute to the intended goal of the system.

            Which is to say, I don't think the stock market's purpose is to seperate idiots from their money, nor give that money to the con man. I hate to see the market gamed like that.

  • A second source? Journalists? (Score:5, Funny)

    by Lispy ( 136512 ) on Wednesday May 05, 2004 @02:47PM (#9066254) Homepage
    Those were the days... ;-)

  • Steve Case... not a loser in my book (Score:5, Insightful)

    by LinuxParanoid ( 64467 ) * on Wednesday May 05, 2004 @02:48PM (#9066260) Homepage Journal
    And - most of all - Steve Case is a big, fat loser. This was always more familiar territory for me, since that was exactly how most of the world regarded Case throughout his career. For most of it, he had always and forever been a loser."

    Watching Steve Case from a distance, he always looked like one of those underestimated but really really shrewd guys to me.

    I never paid for AOL (though I did use a free trial once), and I never owned the stock, but in my book, Steve Case is a big winner.
    A) I give him credit for being able to, on at least one occassion which I was familiar with, bring innovative technology to market. I loved his the Commmodore 64 BBS service, QuantumLink, which he later turned into AOL. It had some of the same "least common denominator" aspects as AOL, but it also could do streaming download+playing of MIDI sound files at the same time I was typing and reading in chat rooms over a 1200 baud modem. Pretty fancy for 1987 in the DOS PC era.
    B) The AOL service may have been lame and its customers clueless, but hey, Steve Case stayed focused on the customers and making stuff easy to use for them. Props for that. Even if it wasn't perfect, it was a lot better than most of the alternatives-- I could safely recommend it to friends/acquaintances for many years without having to go to their house and/or do maintenance on their PCs to get/keep it working.
    C) He managed to grow his company like a madman for well over a decade, continued to hold onto and grow the business for 6+ years despite it being wildly overvalued, and then sold it out for a huge premium 3 months before the Internet stock market bubble burst. To me that is just an incredible feat of timing and business acumen, and one that was almost totally optimal for his shareholders (albeit not Time Warner's shareholders... but hey, he was the seller, not the buyer!) That wasn't just dumb luck. He knew what he was doing. He probably didn't know the bubble would be over in 3 months, but he knew his stock was way overvalued (and not just due to some sales shenanigans.) Hey, *I* knew in 1996-1999 that AOL was overvalued, but if I were CEO, could I have picked a better time to sell out and maximize the bubble-value for my shareholders? No way!
    D) And I appreciate any money they poured into Mozilla.

    So no, I don't think Steve Case is a loser.

    --LP

    • Re:Steve Case... not a loser in my book (Score:5, Interesting)

      by Anonymous Coward on Wednesday May 05, 2004 @03:18PM (#9066606)
      Question from the floor:

      Who believes that part of the bubble bursting may have stemmed from the AOL/TW merger? TW suddenly realizes "Holy shit, these people just bought us with fake money".

      Suddenly, everyone realizes that the impossible has happened (all that fake value has purchased real value) and the system corrects itself by removing all other fake value.

      I mean, everyone I know (business and geek alike) knew it was a bubble, but that knowledge didn't burst it. Perhaps it took a real economic incident to convince the 'system' of the problem?
      • this is an interesting theory, and imho may have some merit. it took a catalyst to bring the whole thing down....

      • Why the Internet bubble collapsed when it did... (Score:5, Interesting)

        by LinuxParanoid ( 64467 ) * on Wednesday May 05, 2004 @04:32PM (#9067247) Homepage Journal
        My private theory is that the bubble collapse is actually a side-effect of Y2K.

        In two ways:
        1) Tech spending boomed before Y2K as companies spent huge amounts on both hardware and software efforts to make sure they were ready for Y2K, had backup systems, etc. There was a huge drop in IT spending right after Y2K since companies already had all the equipment they needed. This hammered Q1 earnings for tech stocks in March/April and boom, the Internet bubble burst. This fact (reduced revenue and profits of tech firms) is well-documented in earnings reports of that time frame. I'm very surprised this hasn't gotten more press, other than that nobody wants to give the naysayers any credit for maybe have been, in some way they never anticipated, right.
        2) The Federal Reserve had flooded the money supply right around Y2K to ensure there were no financial liquidity crises. When they re-tightened up (or at least stopped increasing the money supply) post-Y2K... boom, instant fiscal tightening contributing to a recession. I've never seen this documented, at least the re-tightened part, so take it with a grain of salt.

        --LP

        • Regarding the Y2K part of your hypothesis:

          Just before I graduated from college in 98 (a little Y2K nostalgia for ya), I interviewed with a lot of consulting firms who were in a hiring frenzy. It didn't take me long to sense the pattern and start asking them, "What's your strategy for keeping me off the bench once Y2K has come and gone?" None of the people I asked had a good answer. It was pretty obvious they had never once considered that businesses might need less outside help once The Mother of All Bugs

      • If your theory is true (and I think it's a very wise observation) don't you think it would have been true for the first of ANY random overvalued dot-com to cash in? Sure, Case is the guy who did it using AOL, but I don't think you can blanket blame him personally for the collapse. I think that any of the financially significant dot-coms of the era could have raided any random brick-and-mortar megacorp and caused the same fallout.

        Perhaps the bubble would have collapsed more slowly if it had been a series

    • To me that is just an incredible feat of timing and business acumen, and one that was almost totally optimal for his shareholders (albeit not Time Warner's shareholders... but hey, he was the seller, not the buyer!)

      Didn't Time Warner and AOL shareholders both get, um, AOL-Time Warner stock as a result of the deal? You know, the stock whose value plummeted?

  • Way to mangle a good joke... (Score:5, Informative)

    by artemis67 ( 93453 ) on Wednesday May 05, 2004 @03:00PM (#9066414)
    An excerpt from "How Ronald Reagan Changed My Life" by Peter Robinson

    Chapter One
    The Pony In the Dung Heap
    When Life Buries You, Dig
    Journal Entry, June 2002:

    Over lunch today I asked Ed Meese about one of Reagan's favorite jokes. "The pony joke?" Meese replied. "Sure I remember it. If I heard him tell it once, I heard him tell it a thousand times."

    The joke concerns twin boys of five or six. Worried that the boys had developed extreme personalities -- one was a total pessimist, the other a total optimist -- their parents took them to a psychiatrist.

    First the psychiatrist treated the pessimist. Trying to brighten his outlook, the psychiatrist took him to a room piled to the ceiling with brand-new toys. But instead of yelping with delight, the little boy burst into tears. "What's the matter?" the psychiatrist asked, baffled. "Don't you want to play with any of the toys?" "Yes," the little boy bawled, "but if I did I'd only break them."

    Next the psychiatrist treated the optimist. Trying to dampen his out look, the psychiatrist took him to a room piled to the ceiling with horse manure. But instead of wrinkling his nose in disgust, the optimist emitted just the yelp of delight the psychiatrist had been hoping to hear from his brother, the pessimist. Then he clambered to the top of the pile, dropped to his knees, and began gleefully digging out scoop after scoop with his bare hands. "What do you think you're doing?" the psychiatrist asked, just as baffled by the optimist as he had been by the pessimist. "With all this manure," the little boy replied, beaming, "there must be a pony in here somewhere!"

    "Reagan told the joke so often," Meese said, chuckling, "that it got to be kind of a joke with the rest of us. Whenever something would go wrong, somebody on the staff would be sure to say, "There must be a pony in here somewhere.'"

  • Buying hard goods with soft money (Score:5, Insightful)

    by Clod9 ( 665325 ) on Wednesday May 05, 2004 @03:15PM (#9066573) Journal
    The greatest lesson I learned watching this merger was that you CAN convert fake wealth to real wealth.
    By "fake wealth" I mean paper wealth, like the stock price of a company or the price of any other paper or electronic financial instrument.
    You buy low and, if you get lucky, the price goes up; and if you can't convert all that wealth to cash, instead you buy a "real company", lots of real estate, or something else with intrinsic value.
    Then, even if your original business goes belly up (like AOL's is doing) you are sitting pretty.

    Time Warner's management and stockholders made a huge mistake, because they were greedy. But if I'm ever in AOL's shoes, I'd do exactly the same thing.

  • I figure that Steve Case is no dummy and that he saw that his company was worth much, much less than its market cap. So he looked around and figured out how to turn its overblown value into something that would last a bit longer. He would use the "synergy" thing to sell it. If he hadn't done the merger, his shareholders would have taken a big bath when the bubble burst. He was beholden to his shareholders, not TW's. After the merger, his shareholders held more real value than before. It's like they ha

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