America Online Inc came in with the expected messy second quarter numbers, slightly worse than Wall Street analysts predicted, but they could be forgiven for being somewhat confused as the country’s largest internet and online services provider stumbled from one public relations disaster to another, picking up charges and losing friends as it went. But one balance sheet item catches the eye. Current liabilities outstripped current assets by more than 50% at the half-way stage: $490.3m compared to $297.3m. If highlighted this could raise takeover speculation, but AOL seems to have so many friends on Wall Street it wouldn’t be a surprise if this is lost in the mire. The company would seem to be treading a fine line. AOL reported second quarter net losses of $154.8m, after a $74.3m restructuring charge and a $24.3m settlement charge, against profits last time of $9.5m, on revenues that rose 64.3% to $409.4m. The losses of about $0.60 excluding the charges was about six cents above First Call average estimates. But the company is no doubt not too worried by the 13% hike in its share price over the past four turbulent weeks. That settlement charge was the one imposed by 36 Attorneys General late last month for failing to provide an adequate service after switching to flat rate pricing at the start of December and compensating disgruntled members. The other hit was for the restructuring announced last October. AOL said it has got commitments from its suppliers for 50,000 modems so far and it will have 150,000 new modems available by the end of April, two months quicker than it thought previously. AOL has set aside $350m for network infrastructure improvements over the next five months. AOL plans to hold its subscriber base at its current 8 million level until further notice. Net losses for the six months to December 31 were $508.5m, after a $385.2m write-off of deferred acquisition costs and the above charges, up from losses of $1.4m last time, which included a $17.0m acquired research and development charge, on revenues that were up 70.0% to $759.4m. The $385m hit came in the first quarter when AOL finally admitted that most of its subscribers don’t hang around for two years and wrote-off the deferred subscription costs it had previously capitalized. But problems continue nonetheless. Yesterday users were blocked out for an hour or more due to a buggy software upgrade. Those logged on were okay, but nobody else could get access. AOL added 33 new advertisers in the quarter, brining the total in the US to 90. Service was launched in Austria and Switzerland and membership grew in the UK, Germany and France. AOL now has around 400,000 members in Europe. Cash and equivalents at the half-way stage was $130.2m,
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