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    America Online Inc.
    list rank

    From the April 28, 1997 Washington Post


    '96 (in $ 000s) % Change From '95
    Revenue 1,093,854 177.4
    Net Income 29,816 --
    Rank Last Year: 35

    Description:
    America Online runs the nation's largest computer online service. The service includes electronic mail, access to the Internet, live "chat," online stock trading, shopping and a variety of online programming such as news, sports and entertainment. Users link their computers to AOL over their telephone lines.

    Business Resume:
    • Contact Info --
      22000 AOL Way
      Dulles, Va. 20166
      703-448-8700
    • Main Business --
      Online computer service
    • Founded --
      1985
    • Chairperson --
      Stephen M. Case (CEO)
    • President --
      Stephen M. Case
    • Employees --
      7,000
    • D.C.-Area Employees --
      2,600
    Developments:
    It was a tumultuous year for AOL. The company's stock lost more than half its value and then regained some of that ground. Membership grew to 8 million from 4.6 million during calendar 1996, solidifying AOL's lead in the race for cyberspace. But, in the wake of an accounting change that turned profits into losses, the company spent the second half of the year in the red.

    Early in 1996 AOL recruited Federal Express Corp. Executive Vice President William Razzouk to become its chief operating officer and infuse its management and customer service with greater discipline. But Razzouk didn't fit in and within five months he was out.

    During the spring AOL struggled to retain subscribers, who were leaving almost as fast as they were signing up for free trial offers.

    In June the company agreed to hand out cash and free online time to settle class action lawsuits alleging it had misled subscribers about its billing practices.

    In August, a technical problem knocked AOL offline for almost 19 hours.

    In October, AOL announced that it would take a write-off of $385 million to abandon a controversial accounting policy that had enabled it to report profits when it was spending much more money than it was taking in. Robert W. Pittman, one of the creators of MTV, was appointed to a top post, and the company closed its GNN Internet service in a corporate restructuring.

    Facing stiff competition, the company announced it would offer unlimited use of its online service for $19.95 a month as an alternative to metered billing. State regulators alleged that AOL's plan to automatically shift subscribers to the new billing option, a price increase for many, could have violated consumer protection laws, and AOL agreed to give refunds to any aggrieved customers.

    As the "all-you-can-eat" pricing took effect in December, usage soared, and busy signals prevented many subscribers from connecting to the overloaded network. Under pressure from state regulators, AOL agreed to issue more refunds and credits and ramped up efforts to expand capacity.

    The company intensified efforts to generate revenue from advertising and electronic commerce, hoping to wean itself from dependence on subscriber fees. Though advertising and electronic commerce represented less than 10 percent of revenue in the quarter that ended Dec. 31, AOL showed progress in March when Tel-Save Holdings Inc. paid it $100 million to promote Tel-Save's long-distance phone service.

    Copyright 1997 The Washington Post

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