May 5, 2003 6:31 PM PDT
Turner slashes AOL stake
Turner sold 50 million shares to "diversify his financial holdings," according to a statement issued by the company. A further 10 million shares were transferred to a charitable trust, after which they were also sold. At Monday's closing price of $13.38 a share, the sale would have netted a little more than $800 million.
He plans to stay on the board and "remains supportive of management," according to the statement, as the company heads into what's likely to be a heated shareholder meeting on May 16.
Turner's retirement comes against the backdrop of a broad management shake-up at the company that earlier saw Steve Case agree to step down as chairman. Case is seeking to remain on the board, but he may be in for a fight. According to a report in The Wall Street Journal, the company's largest shareholder, Capital Research & Management, next week plans to withhold its votes from Case and two of his supporters.
Investor anger continues to boil in regards to the 2001 merger of America Online and Time Warner. The deal aimed to tap into the synergies of the Internet, but quickly unraveled amid a sharp drop in advertising spending, divisional infighting and disclosures of accounting irregularities. In January, the company posted the largest corporate loss in history after writing off about $99 billion in merger-related charges.
Turner had originally supported the merger but later became a fierce critic as the company's stock went into free fall, wiping out some $300 billion in shareholder value--including between $7 billion and $8 billion of his own money. "I'm mentally prepared to sell my airplane," he joked recently at an industry conference.
Turner isn't the only one upset with the deal. Earlier this month, two institutional investors filed a $1 billion stock fraud suit against the company, accusing Case and other insiders of hiding the company's problems.
The suit followed revelations of an accounting dispute with the Securities and Exchange Commission that could force AOL to restate as much as $400 million in advertising revenues. That would be over and above some $190 million that AOL has already admitted was booked improperly.
Monday's sale is the largest in a series of recent divestitures by Turner, including a 5 million share sale announced in a securities filing in March. As of Jan. 31, 2003, he was listed as holding some 131 million shares, or about 3.2 percent of AOL, making him the largest individual shareholder.