AOL Stock Falls on News of Inquiry
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NEW YORK (AP) _ AOL Time Warner stock tumbled nearly 7 percent Friday on published reports that the media conglomerate, whose accounting practices already are being investigated by federal regulators, may have used its relationship with a business software company to distort its financial performance.
AOL Time Warner fell 71 cents on the New York Stock Exchange to close at $10.30 following articles in The Wall Street Journal and The Washington Post on Friday that authorities are looking into whether the company’s AOL division booked tens of millions of dollars that it received from selling PurchasePro.com stock warrants as advertising revenue. Stock sales are usually considered gains, not revenue. PurchasePro fell a penny to 32 cents.
An AOL spokesman declined to discuss the PurchasePro issue specifically, but said the company is cooperating with the SEC investigation that it had confirmed on July 24. That disclosure followed a series of Washington Post articles questioning the company’s accounting practices.
``We have no independent knowledge of any of the companies that have been contacted by the SEC but it is completely in keeping with an investigation that some would be contacted,″ said John Buckley, executive vice president of corporate communications at AOL.
A source with knowledge of the investigation said that two AOL executives, Myer Berlow and David Colburn, were deposed earlier this summer by SEC investigators looking into PurchasePro’s financial statements.
PurchasePro declined to comment Friday, but the company confirmed to the newspapers that it was speaking to the SEC about the AOL transactions.