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But the media giant faces significant challenges, ranging from a federal probe of accounting practices at its online unit to a depressed advertising market. What's in store for AOL as it deals with these challenges AND prepares to bid farewell to Chairman Steve Case next month?

Read Vise's story from today's newspaper: "AOL Parent Is Again Profitable."

Join David A. Vise at 2 p.m. on Thursday, April 24 to discuss AOL Time Warner.

A Transcript of the Discussion Is Below:

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washingtonpost.com: David Vise will be online in just a few moments. Thanks for your patience.

washingtonpost.com: Good afternoon and thanks for joining us today. To get us started, what's the bottom line on yesterday's AOL Time Warner earnings statement: A sign things are surely going the company's way these?

David A. Vise: Hi everybody and thanks for joining us to talk about AOL Time Warner today.
For the first time in more than a year,AOL Time Warner reported a quarterly profit. also significant, AOL, for the first time in recent memory,did not surprise us with any bad news.

McLean, Va.: I guess the only real question is Fold, Hold, or Up the anty?

David A. Vise: I cannot give advice on the stock other than to suggest you follow the maxim of patience as a long-term investor if you have confidence in the business and the management.

Herndon, Va.: Do you think AOL-Time Warner got into the broadband "game" too late, and will they be able to offer it at a competitive price?

David A. Vise: America Online got into the broadband game a few years too late. Executives were distracted by the merger. If the company had been doing what it is rolling out now with the "World Wide Wow" several years ago, things would be in much better shape now.

Washington, DC: People forget AOL/TW has written down BILLIONS in goodwill. Can't investors see that their earnings are thus inflated? It didn't just go away, you know.

David A. Vise: Good point. The goodwill writedown last year leads to favorable quarterly comparisons in 2003. However, it does not, by itself, produce a profit. This is a company that has been hungry for some good news to begin rebuilding confidence and it finally produced on that score.

Long Beach, Calif.: I noticed that AOL is suing a major spam-master. How important is this to AOL? I think it is crucial, as their higher rates for ISP service should be justified by the very best spam protection. Your thoughts?

David A. Vise: SPAM is a top priority for AOL for a few reasons. More than half of the e-mail traffic on the service is SPAM. This can lead unhappy subscribers to leave. Also, AOL is paying the cost of carrying all that junk e-mail on its network. So there is a bottom line impact too.

Washington, D.C.: Steve Case was painted to be a pretty cocky and mean guy. People in the D.C. area likened his demeanor as similiar to the mean spirited and arrogant Redskins owner, Dan Snyder. What will Case do next?

David A. Vise: I'm told that Steve Case has not made any major decisions about what he will tackle next.

Dulles, VA: How significantly are the SEC investigations priced into the stock?

David A. Vise: I think the uncertainty due to the SEC probe is priced into the stock. I also think is a major reason why many analysts and investors are afraid to invest. This is a company that needs, and wants, to put the probe behind it but does not have control over that issue.

Dallas, Tex.: How fast is AOL-TW's online unit sinking, seriously?

David A. Vise: The online unit is a mature business throwing off a lot of cash that is slowly losing subscribers and rapidly running off its backlog of advertising. The reports of its death, as well as suggestions of any instant revival, are both greatly exaggerated.

Dulles, Va.: How do you sneak into the AOL cafeteria?

washingtonpost.com: David: This reader raises an intersting topic. How easy is it as a reporter to cover the company? How open are they to media queries and visits to their corporate campus in Dulles, Va.?

David A. Vise: You dress like you work @ AOL. But there are better places to eat! The only problem with trying to sneak in is you need an ID badge and the company has security. As a reporter covering the company, America Online has taken an open approach with me to help me understand the business and its management.

Arlington, Va.: Earlier this week you reported that the SEC is expanding its probe of AOL's accounting. What's the timeline for this investigation to be completed and resolved once and for all?

David A. Vise: The company hopes the SEC probe will be completed sometime this year. Its executives believe the most likely scenario is a period of months. But the SEC is reviewing over ONE MILLION pages of documents and there are no guarantees about when this will end since the SEC does not want to overlook something that shows up later.

Harlem, NY: With the airlines suffering from being overburdened with debt and poor business practices, and from just being too big, in general, do you think broadband and DSL suppliers like AOL should take note and re-formulate the way they do business?

What I mean is, it seems to me that the airlines should have started a massive overhaul of how they operate, and a gut feeling tells me that perhaps broadband and DSL/internet service providers may have to do something similar some day.

Opinion, please?

David A. Vise: Interesting question. A good one to ponder. I think the business will look very different 5-10 years from now than it does and that CEO Jon Miller of the America Online unit recognizes that and is trying to make some major changes. But I also think that unlike the airlines, AOL has a loyal base of dial-up users who will stick with the company and provide steady cash flow for the foreseeable future.

St. Paul, Minn.: AOL has a funny pop-up message when you logon, sometimes when you logoff. It asks if you want to start another account for our other screen name?....My kids hit approve and they started billing to a credit card that was no longer valid anymore, since we dropped the credit card. The submitted the charge, and when it came back "closed" they waited a week or so and resubmitted it and it went through. I found out 45 days to late to cancel the account and I had to pay for 2 accounts, even though I never signed on to the new account. There is a quote out there somewhere that said "With 8 million subscribers, how could you not make money?"

They suck, but ther content is second to none...

David A. Vise: Thanks for sharing your experience. I've heard similar complaints from others. As to content, they have tremendous resources to drawn upon.

Potomac, Md.: I'm thinking about taking a short position in AOLW. This company seems like a ticking time bomb to me. Everyday I read the SEC is looking at some new advertising deal AOL made with another company. If this is another Enron, I want to be in on it. What do you think.

David A. Vise: I can't give you stock advice. But I can remind you that the stock has already been battered and recently has begun to recover. The current trend is up, not down.

Fayetteville, N.C.: AOL is a poor value as an ISP because of its crowded "pipeline" and frequency of server refusals during peak hours plus its' incompatabilty with MS-based servers.

I cannot link via AOL with my MS-based server at work to check for my office e-mail. The problem is with the AOL browser. Before anyone crows about AOL profitability, they need to balance that against value provided. AOL looses on that score.

David A. Vise: Thanks for sharing your experience.

Baltimore, Md. How much truth to the rumors that the Dulles HQ will be closed down once the brand-new New York office building is complete?

David A. Vise: I have heard no serious discussion of eliminating the headquarters in Dulles. I think, over time, all ways of managing costs will be considered. But there is nothing imminent.

Northern VA: AOL, aside from TW, losing subscribers is looking for a Next Big Thing. Any idea as to what It is?

David A. Vise: The next new thing: finding a way to profit from Instant Messaging. If AOL can do that, it will be set.

Falls Church, Va.: Boy how times have changed. Two years ago, AOL Time Warner was being celebrated not just by Wall Street, but by the mainstream business media -- including The Washington Post. In retrospect, are the major financial media partly to blame for all the hype?

David A. Vise: Yes.

Salt Lake City: AOL is a terrible browser. It always has been. Seven years ago ignorance was a good enough excuse, but in 2003, failing as they are, why hasn't AOL reformatted?

David A. Vise: I think the company lost focus in staying ahead of the technology curve and putting its emphasis on serving customers. Instead, management went after maximum advertising and a mega-merger.

San Bruno, CA: Is the AOL business profitable on a stand-alone basis?

David A. Vise: Yes.

Derwood, Md.: I'd read that AOL was offering a "BYOA" (Bring Your Own Access") plan for users that have high-speed connections from ISPs other than AOL.

Why would someone buy this?

Don't AOL users that have the dial-up accounts that are charged by the minute get free access to AOL when they connect via a broadband connection? If I wanted broadband access to AOL, why wouldn't I just get a per minute dial-up account and just never dial in?

David A. Vise: The BYOA account is cheaper than the dial-up service.

Tampa, Fla.: AOL is as user friendly as a bankrupt airline. The company's practice of not allowing e-mail names to be moved from a closed master name under 6.0 to the new master name in 8.0 is maddening. Imagine having to change your phone number every time you purchase a new phone. I've already switched to Direct TV to avoid their cable service and now I'll fire their online service as well to be free of this mismanaged turkey.

David A. Vise: Thank you for sharing your strongly-held views.

Bethesday, Md.: I have lots of AOL stock that I paid $80/share for. Am I going to recoup that any time, or should I forget about that?

David A. Vise: You will not recoup it quickly. This is a beautiful spring day in the Washington area. My suggestion is to get outside and enjoy it.

Vienna, Va.: Do you think AOL is currently doing anything wrong SEC-wise?

David A. Vise: I think that is a fascinating question. The tug of war over whether the Bertelsmann deal needs to be restated suggests AOL is not just rolling over and accepting the SEC's views. At the same time, the company says it wants to put this matter behind it. There is some tension there.

M Street: What do you feel are the strongest parts of AOL-TW's business? I understand that music isn't doing so well, the movie studio seems to be fairly strong as does magazine publishing?

David A. Vise: The strongest parts of the business, from a financial vantage point, are filmed entertainment and cable, ranging from HBO to Warner to the growth and digital upgrading of the Time Warner cable system itself.

Manassas, VA.: I was fascinated by Ted Turner's role in the whole Case ouster. Why isn't he planning to play a larger role with the company? Isn't it true that he is the largest single shareholder?

David A. Vise: Ted Turner is the largest individual stockholder. Recently, he has been a major seller. Turner decided, after Steve Case resigned, that he had achieved a major objective. He chose to stay on the board but to leave his post as vice chairman. I think he believes this is the best way to maximize the value of his stock.

Silver Spring, Md.: What's the business case for spinning off Time Warner Cable? Seems like, given the goal of expanding broadband service, linking America Online with the cable business is a no brainer?

David A. Vise: AOL Time Warner has $29 billion in debt and cannot grow Time Warner Cabke through acquisitions by borrowing. A partial spinoff would give the company stock in Time Warner cable as a currency it could use to acquire other cable systems. The move is being delayed, however, by the pending SEC probe.

Falls Church, Va.: So, will Parsons sell the America Online business?

David A. Vise: Richard Parsons says he has no plans to sell America Online. If someone made a mega-offer, he would certainly consider it. Absent that, I think he is happy to have the several hundred million dollars in cash the business throws off each quarter.

Oakland, CA: I still don't understand how AOL by itself (not the rest of the Time/AOL conglomorate) plans to make money.

Does AOL they plan to make its money from subscription fees paid by users, or from on-line advertising. Or is a lot of AOL's income coming from somewhere else?

David A. Vise: AOL derives billions of dollars in cash from 26.2 million subscribers in the U.S. who pay monthly fees to be on the service.

Dulles, VA: What are your thoughts on the current AOL/Micro$oft "relationship"?

David A. Vise: Relative to some prior periods, AOL and Microsoft are in a period of detente. They are even allies in their battle against SPAM and SPAMMERS!

San Francisco: Big picture, will AOL become a means to an end for TW to gain a digital medium for its analog capital?

David A. Vise: That is part of the vision of senior management.

Washington, DC: What do you know about the lawsuit alleging insider stock selling by AOL execs? Is this a nuisance suit or a case that stands a chance of going to trial?

David A. Vise: This lawsuit will not be resolved until after the SEC probe is completed. It is not a nuisance suit, per se, and experts believe the company will be forced to settle this, and other, shareholder lawsuits for a considerable sum.

Baltimore: What's up with AOL Latin American and AOL in Europe? Didn't one of them go bankrupt?

David A. Vise: AOL Latin America did run into financial crisis. As for AOL Europe, it is less than hoped for. These days, selling a product in Europe called "America Online" may not savvy marketing.

Kaohsiung, Taiwan: David, really, what does AOL provide that can't be found easier on any other browser? I have always found AOL tedious and slow. That's why for nearly a decade I haven't made my little donation to AOL's future good news.

David A. Vise: AOL is easy to use and connects people to others with America Online accounts. People differ over the value of the content. But human beings are creatures of habit so it is good to be the largest Internet Service Provider in the world. The goal is to keep that leading positoin, even as the means of connecting move for many to broadband.

Washington, DC: What's the 411 on Parsons? How did he survive all the tumult of the past 2 years to land on top?

David A. Vise: Richard Parsons is the last man standing at the top of AOL Time Warner. His background working with the Rockefellers in philanthropy, and his political experience, have come in handy amid boardroom turmoil. And he has put new people into key operating jobs too. He doesn'tlet his ego get in the way as well, I'm told.

washingtonpost.com: How different will the America Online unit be run once Steve Case departs as chairman next month? Will Parsons try to institute even more changes, or does Jon Miller have Parsons's support for the changes he's already pursuing?

David A. Vise: Jon Miller has Richard Parson's support. Actually Richard Parsons has dispatched Don Logan to keep an eye on Jon Miller and America Online. I do not anticipate major changes flowing from Case's departure as chairman.

San Francisco: Finishing a thought... So did TW acquire AOL to eat it? That is, merely as a way to obtain its medium capital? If so, will AOL-TW have an identity crisis as TW tries to digest its half-brother?

David A. Vise: Perhaps. But that is the story of a company called Time Inc. that merged with Warner. It has been through this process before.

Virginia: Off-topic. When are you going to update more talks at The Bureau and the Mole?

David A. Vise: Good question off the AOL front. I hope you enjoyed the book. If you submit fresh questions there, I will be happy to answer them soon.

Kaohsiung...: David, honestly, I would have signed up for AOL years ago if I found it easy to use. I found it, and find it still, quite to the contrary.

David A. Vise: What can I say?

Los Angeles, Calif.: When is the company going to change its name from AOL Time Warner to just plain Time Warner?

David A. Vise: Not before its May board meeting.

Quantico, Va.: What is the latest on the insider trading allegations against Steve Case and others?

David A. Vise: These allegations were contained in a civil lawsuit and are not, at this stage, the SEC's primary focus. However, I believe that given the prominence of the allegations, this is something that the SEC will dig into as well.

Arlington, Va.: Who are the biggest AOL-TW investors other than Turner, and what role did they play in the management changes?

David A. Vise: Gordon Crawford runs a major institutional money management firm on the West Coast. He was involved in pressing for management changes. Crawford and Turner have worked together on these issues.

Long Beach: Do you fear for an open society as a result of media consolidation? Can any of the giants, dependent as they are on the politicians for changing laws not to their liking, really stand up to the govt.?

David A. Vise: Fortunately, there are major independent media organizations that report the news as they see it, without interference from business issues. The Graham family, for example, has been tested over and over and never allowed pressure from the goverment to get in the way of The Washington Post doing its job.

Washington, DC: Why did AOL sell Comedy Central? I don't get it, being a huge CC fan...

David A. Vise: Unfortunately, when you need to raise big bucks to pay down debt, you have to sell some of the good stuff.

Bethesda, Md.: When it comes to reading the company's SEC filings these days, are they easier to follow than the ones they put out before the probe?

David A. Vise: Yes.

San Francisco: Ahem...

So if AOL-TW's recent birth throes have been a partial result of AOL's lackluster performance, doesn't that actually portend well for the company big picture? Won't TW in the long run grow leaps and bounds in the digital field because of this little hors d'oevre called AOL?

David A. Vise: That is what top management believes. They think it is early in the evolution of the Internet. And they like owning the biggest and best known Internet access service.

Hartsville, SC: What, if anything, does AOL intend to do about the massive amounts of spam that collect in all our AOL mail boxes each day? AOL has a much bigger problem thatn my other online servers.

David A. Vise: They are filing lawsuits against Spammers, pressing for legislation and trying to develop better technology. But they are losing the spam war, as any regular AOL user knows from all the junk e-mail that crowds the in-box.

Gaithersburg, Md.: What's up in China? Wasn't AOL doing some big deals there a couple years back?

David A. Vise: I have not heard anyone @ AOL mention China since I began covering this beat last year.

Washington, DC: What is Ted Leonsis doing for AOL these days?

David A. Vise: Ted Leonsis is focused on marketing and trying to be the internal advocate for AOL users, so they are considered heavily when business decisions are made.

Alexandria, Va.: You mentioned earlier that AOL's sweet spot is figuring out how to make money off of IM. How seriously are they working on that? Have they floated any specific revenue models?

David A. Vise: The volume of IM daily, on the closed AOL/AIM/ICQ system, far exceeds the volume of daily e-mail. They are the leader in the U.S. and globally. But they have not devised a major way to profit from this incredibly powerful communications tool yet.

Alexandria, Va.: I know you can't give stock advice, but is there any chance AOLTW stock will ever regain its $55 or so value of just a few years ago?

Like many former AOLTW employees, I have a huge chunk of AOLTW stock in my 401K retirement (all company matches were provided only in AOLTW stock). Now I don't know if it's smarter to wait for a return of something like the old value, or to accept that the stock will bump along forever at about $12-13, as it has for the last several months, and just sell it off, or perhaps to sell right away in case things get worse.

I used to think that Enron employees in this same (but more extreme) situation had only themselves to blame, but now I understand only too well how they watched their retirement account values vanish without knowing when or how to act.

Thank you for your help.

David A. Vise: Don't keep all your eggs in one basket. Diversification is an important way to avoid downside risk with an investment.

Silver Spring, MD: My Question is,

What do we know if AOL were interested in launch a new online portal to be spun-off from it's Cable Network and if so would it be interest in acquiring about my startup
firm, its name is unquie if Aol Time Warner
were interested in it, it's, MyAolWiFi.com

David A. Vise: Good luck.

San Francisco: Is AOL-TW, let's just call it Warner, thinking home "viewership" of music and video will be its future, or is it thinking more along the lines of using the AOL network as a means of delivering TV, and/or advertising film? I get that they're investing in the future with the clearest browser bet, but what are they thinking they'll profit on in fifty years when "you've got mail" sounds like a lick of Neal Diamond?

David A. Vise: Nobody knows, or pretends to know, where how this business will evolve 50 years from now. Fifty years ago, nobody predicted we would be chatting online as we are now.

Alexandria, Va.: I know from reading news reports that AOL has significantly downsized their Dulles operations over the past two years. Do you have any idea how many employees remain at Dulles now, and how that number compares to their staffing level in 2000?

David A. Vise: The staffing levels at Dulles have declined over time. AOL is in a cost-cutting mode. It is doing this by cutting its network costs and fees for computers and leases, as well as by reducing headcount in Dulles and in its customer call centers.

Washington, DC: I beg to differ about your goodwill writedown and profit point. AOL reported EBITDA numbers of $2 billion, and their write downs (of a whopping $100 billion)would have been amortized at about $840 million per quarter. This cuts that number almost by HALF! It was clearly a move to boost earnings (though free cash flow isn't affected).

People desperate for good news have a short memory it seems.

David A. Vise: Thank you for sharing your analysis.

Washington, DC: What role if any does Interactive Marketing president Myer Berlow play in the latest developments. Have we any idea where David Colburn is putting his creative negotiating skills to work lately?

David A. Vise: Those are good questions. For the answers, we will have to wait until next time. Stay tuned and in the meantime, let me do a little digging. In the meantime, if you have thoughts or ideas you want to share, pls email me at ViseD@washpost.com.
Thanks everybody and have a great day.

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