Maybe Bob Pittman Can't Walk on Water
For the longest time, AOL Time Warner co-COO Bob Pittman was known for his chutzpah. Three years ago, the supremely self-confident executive promised incredible earnings gains every quarter at America Online -- and delivered.
When free Internet service providers attacked AOL's subscription-based market, Pittman dismissed them as a fad. Then, he raised his service's monthly price -- by 10%. In the end, he was right. Free ISPs turned out to be unsustainable. Consumers put their faith in quality brands, as the marketing whiz in Pittman well knew they would.
Those familiar with AOL, including its many fans on Wall Street, expected Pittman to work the same magic once AOL and Time Warner merged. Costs would come down. Profits and the stock price would go up. AOL and its new parent company would be meaner and better than ever. One year later, however, a logical question has surfaced: Where's Bob?
While he has cut costs, Pittman is grappling with a new reality. He's no longer in absolute charge of a one-dimensional Internet company with seemingly endless potential. Instead, he's riding the corporate equivalent of a great blue whale -- a company so huge, with so many fiefdoms, that at times it has a mind of its own. For now, anyway, Pittman seems a bit chastened by the experience -- and by the choice of his Time Warner counterpart, Richard Parsons, as the replacement for CEO Jerry Levin when he retires this spring.
How many people can name the COO of Microsoft or GE?
What does Wall Street think of Pittman now? The stature and reputation of the best-known chief operating officer in Corporate America (how many people can name the COO of Microsoft or GE?) has been bruised a little, analysts say. He has taken a few knocks for setting aggressive 2001 financial goals the company couldn't meet (although Levin and former CFO Michael Kelly, who has since been demoted to COO of America Online, took their share of heat, too). Most people believe Pittman was passed over, for now, for the CEO job, although he insists he didn't want it anyway.
Speaking before analysts on Jan. 30, Pittman sported a youthful new haircut, and Parsons introduced him as "the fire" within the company. But Pittman's tone seemed to belie that description. He ran through the key financial figures and vowed that AOL would be at the center of the nation's gradual shift to broadband. He also promised to set more modest financial goals in the future. Analyst Jordan Rohan of Soundview Technology Group characterized Pittman's performance as "downbeat body language." Perhaps for a reason: Rohan says AOL Time Warner's new conservatism on earnings forecasts makes it "impossible for us to upgrade" the stock.
"A LOT OF RESPECT."
It's an uncharacteristic spot for Pittman to be in. "Bob Pittman and Mike Kelly are both AOL guys," says Robert Martin, an analyst with Friedman, Billings & Ramsey. "They were superaggressive on the numbers, and at the end of the day it came back to bite them both."
Yet most analysts on Wall Street maintain their faith in Pittman. While they say the entire AOL Time Warner management team has lost a notch or two of credibility, they aren't giving the co-COO all the blame. "I still have a lot of respect for Pittman," says Youssef Squali, analyst at First Albany.
"I don't know of anybody else at the company who has had more experience at different businesses than he has," says Jim Goss, analyst for Barrington Research Associates. "He helped create MTV, turned around Six Flags, worked on HBO with Jerry Levin during his first years at Time Warner, then turned America Online around. I think Pittman is very well equipped to be COO, and I have a sense that he and Parsons will work well together."
If that's the case, then perhaps the wounds AOL Time Warner has suffered will heal quickly. And with Pittman at the helm day-to-day, perhaps its stock price will as well.
By David Shook in New York