Shares of America Online Inc. slid again yesterday--down more than 19 percent since the company announced its plans to acquire Time Warner Inc.--but executives said a short-term drop was expected and there is no floor on the stock price that would dissolve the deal.

AOL stock fell $4.50, or 7 percent, to $60 a share yesterday, after dropping $8.25 Tuesday.

"We fully expected that to take place," AOL President Robert Pittman said yesterday. "We are not yet in a phase when people start to recognize the value of all this."

In the long run, added Pittman--who had been peppered with questions about stock valuation during his Tuesday trip to two investment conferences in California--he and other executives expect the value of the combined stock to rise even more quickly than AOL stock. "We would be in the moron hall of fame if we didn't recognize that," he said.

Pittman and Time Warner President Richard Parsons said there was no arrangement for either side to halt the deal if the stock price falls below a certain level.

Yesterday, for the first time since the $183 billion merger was announced, Parsons and his boss, Time Warner chief executive Gerald M. Levin, made a surprise visit to the AOL campus in Dulles. They arrived without fanfare in black limousines, dressed down for the occasion in blazers sans neckties.

AOL Chairman Steve Case, dressed in one of his characteristic Hawaiian shirts, gave Levin the grand tour of the Internet fortress, and a few dumbstruck employees caught their first non-virtual glimpse of the duo since the well-staged news conference Monday morning.

For AOL employees--who have yet to be addressed directly by Case in a traditional "all-hands" meeting--the visit was a morale booster. They took news of the deal as validation that their company would dominate what Steve Case called the Internet Century. But they have spent the past few days reeling from one emotional extreme to another. There has been high-fiving in the hallways and joyous lunches at the local pub, and then there have been solitary moments staring at the company's downward stock movement on desktop computers.

Now, like giddy AOL junkies coming off an all-night chat-room session, they are only beginning to digest the various messages that have bombarded them from the media, their colleagues and their leaders and seek out information about their future.

As is typical in the AOL culture, most of the communication regarding the Time Warner announcement has been disseminated electronically. "We are a company run through e-mail and instant messaging," Case said in an interview this week.

Throughout the day, for example, employees can log onto a secured site called the AOL "Employee Channel," or EC, where a red light flashes to alert them to any new messages.

Monday morning, a "Dear Colleague" letter, posted at 6 a.m. from Case, greeted those who logged onto the EC and company e-mail with news that they had just become part of "a historic moment . . . when we are transforming the landscape of media and communications."

Many employees heard about the merger long before they received Case's personal note, either over breakfast while watching the morning news, or on their way into work. Carrie Davis, a paralegal for AOL and one of the few people who didn't listen to a radio or television Monday morning, heard about the merger "when I walked into work and one of my colleagues practically tackled me to tell me the news," she said.

Shocked, she and about 45 of her co-workers flocked down to the corporate gym, where they watched the CNN news conference on the 14 television sets hanging from the walls.

AOL executives gave department heads leeway in how they handled briefing their troops. The officers of AOL's interactive properties group, President Ted Leonsis and Chief Operating Officer Donn Davis, reportedly began calling the dozens of people directly under them in the organizational chart at 5 a.m. Monday morning.

AOL attempted to head off concerns about changes in benefits, layoffs and other "me questions," said AOL spokesman Andrew Weinstein, by quickly posting a list of frequently asked questions on the EC. There, employees also learned their stock would vest one year from the close of the merger, and in some cases earlier depending on when they received the options.

The newly merged company will establish its formal power center in New York City, but the initial information given to employees stressed the importance of the Dulles campus.

The four-man "integration" committee made up of Pittman, Parsons, AOL Vice Chairman Ken Novak and Time Warner Digital Media chief Richard Bressler--and charged with restructuring the merged entity--was scheduled to meet for the first time over dinner last night.

The committee intends to start with a "clean slate," Pittman said.

"We're not going to shuffle around operating groups but we will move resources around," he added. "You're not going to take some reporters from People [magazine] and move them to AOL. . . . But we might find a way to interface them."

He also added that he intends for the company's Northern Virginia operations to play significantly more than a data center role. Some employees had been worried that AOL would shift all its "content" operations up to New York, leaving only the units that couldn't be moved for physical reasons.

"This is our home. All our employees would be mad if they had to move. And we just bought this place anyway," said Pittman sweeping his hand toward the location of the Dulles campus's two new buildings, which are scheduled to open later this year and on which construction has continued these past three days.

Yesterday, several people milling around the hallways seemed nervous about potential relocations.

"We don't know what's happening yet, but I don't want to move," said AOL spokesman Nicholas Graham. "My wife works here and we just bought a house."

Employees have also heard the phrase "business as usual," from the executives urging them to get back to work. Bbut that has been difficult, say some.

"We've been basically told . . . there should be no impact on the day to day [activities] for at least six to nine months," said Parul Anjaria, a manager in the information systems division in Herndon. "In systems, they told us to work on projects and not put them on hold."

But Anjaria said she is curious about other issues, such as what the Time Warner corporate culture is like. "I had specifically asked that . . . but I have not received an answer," she said, although she noted that because Steve Case is chairman, she and others think AOL's casual atmosphere will not stiffen significantly.

Carlos Silva, vice president of AOL devices, said he was initially swamped by employees asking him when they could start calling Time Warner to start working on projects they've dreamed of for years.

"A lot of what we're working on is AOL TV," he said, referring to AOL's project to deliver interactive information and entertainment through television sets, "and all of them are like, 'When can we start working with those brands, how quickly can it happen?' "

Silva said he is in awe of the new potential resources now before him. "Throughout your day there's no way that one of the AOL Time Warner brands won't touch your life," he said, "People are like, 'Can you believe the Flintstones are part of our portfolio now?' "

The big question Silva said, is "How soon can we come together so we can really create everything the merger can create?"

That's a question being asked on Wall Street, too. While investors unwilling to wait for the promised synergy drove down AOL's stock price, some major shareholders said they remained optimistic that when the new entity was sorted out, and better understood, the share price would bounce back.

"Clearly, AOL has initiated some change in the paradigm of valuing an Internet company," said Ned Riley of State Street Global Advisors, a major shareholder of both AOL and Time Warner, "and there's uncertainty as to how much one should be paying for the hybrid."

Staff writer Ianthe Jeanne Dugan contributed to this report.

CAPTION: America Online chief Steve Case festoons merger partner Gerald Levin of Time Warner with AOL paraphernalia at the Internet service's headquarters in Dulles yesterday.

CAPTION: Time Warner's Gerald Levin talks to America Online's Steve Case in front of a plaque bearing AOL's mission statement at company headquarters yesterday. At left, AOL President Robert Pittman discusses the deal at the Dulles campus. Below, Time Warner President Richard Parsons talks in Pittman's office.

CAPTION: ON THE THIRD DAY

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