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EDITIONS
Sunday, 11 August, 2002, 10:31 GMT 11:31 UK
Shareholders sue AOL Time Warner
AOL's different business interests
AOL Time Warner's owners have sued the media giant.

In a court filing on Saturday, the investors claimed that the world's largest media conglomerate had committed fraud by trying to hide a fall in its internet service's revenues from advertising.

The lawsuit's aim is to seek damages for anyone who bought AOL Time Warner shares between 18 October 2000 and 17 July this year.

Already, the US Justice Department and the US stock market regulator, Securities and Exchange commission, are investigating AOL Time Warner's accounting practices.

The SEC wants to know whether allegations that the company inflated AOL's advertising sales by $270m (177m) over the last two years are true or not.

Eroded value

AOL's performance has, along with other internet firms, failed to deliver on its lofty promises.

Within the AOL Time Warner group, critics said AOL was pulling its traditional media divisions down with it.

The value of the conglomerate has slumped since AOL and Time Warner merged in 2000.

Soon after the merger, the group's market value stood at $290bn.

On Friday, the stock closed at about $11, making the group worth $45bn.

Inflated revenue?

AOL Time Warner has stressed that its accounting is in accordance with generally accepted accounting practices, and that its outside auditors have repeatedly confirmed that.

During the first three months of the year, the firm was forced to make a record write-down of $54bn.

Earlier this month, the company's chief operating officer Robert Pittman resigned, amid increased scrutiny of the company's profits.


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FORUM
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