The holiday break allowed me to read at least one book: Nina Munk’s superb Fools Rush In: Steve Case, Jerry Levin, and the Unmaking of AOL Time Warner. The book is a fast read and a tour de force that explores the motivations and actions of all the key players in that sad drama. But it’s also a reminder of how crazy things got in the late ’90s boom.
Can you imagine that:
- In the Spring of 1999, AOL was worth more than General Motors and Boeing combined?
- Or that by 1999 more than two thousand (stock option) millionaires were working at AOL. The company’s HR department organized seminars with topics like “How Do You Handle Employees Who Are Already Millionaires?”
- Or that when theglobe.com went public, its shares climbed from $9 to $97 on its first day of trading, before closing the day at $63.50, the largest first-day gain in the history of the stock market (606 percent).
- Or that one AOL board member, Franklin Raines of Fannie Mae, questioned the logic of buying Time Warner. “What I don’t understand is why you picked Time Warner…It seems to me we’re overpaying.”
- Or that one supposed Wall Street sage, Ralph Acampora of Prudential Securities, predicted in early 2000 predicted that the Nasdaq index would hit 6,000 in 2001.
- Or that, Fortune magazine actually put AOL Time Warner CEO Jerry Levin on its cover as “one of the smartest people we know.” And that was in November of 2001 when it was already pretty clear the AOL deal was a disaster. Since the deal was made, more than $200 billion of shareholder value has been wiped out.
- Meantime, AOL CEO Steve Case made $100 million between Feb. and May of 2001 by dumping two millions AOL Time Warner shares; Bob Pittman, who once was thought would succeed Levin as CEO at the company, got rid of nearly all of his AOL Time Warner stock in the spring of 2001, making a quick $73 million.