Despite having a grand total of more than 13 million members with its recent acquisition of CompuServe Corp, America Online Inc feels it necessary to increase its usage rates, and from April 1 users will have to pay $22 per month, instead of $20 for unlimited time on the service. In its defense, the Dulles, […]
Despite having a grand total of more than 13 million members with its recent acquisition of CompuServe Corp, America Online Inc feels it necessary to increase its usage rates, and from April 1 users will have to pay $22 per month, instead of $20 for unlimited time on the service. In its defense, the Dulles, Virginia company says that members have tripled the amount of time each of them spends online since flat rate pricing was introduced at the end of 1996. In addition, the company reorganized yesterday into three units and fired 500 people at CompuServe (see separate story). All in all, good news as far as Wall street is concerned. The news was good for an $11.875, or 12.0% rise in AOL’s stock, which closed at $110.325. At one point it touched $112. The initial surge in usage from the change to flat-rate pricing caused the barrage of complaints that rained down on the company at the start of last year (when the shares were at $33 per share), and forced AOL into a massive upgrade program, that it says has cost it $700m over the past year. As expected, and reported yesterday, AOL also reorganized into three brand groups and promoted Bob Pittman to president and chief operating officer of the whole company, running the day to day operations and leaving chairman and chief executive Steve Case to concentrate on company strategy. The three new groups are AOL Interactive Services, CompuServe Interactive Services and AOL Studios. Previously it had been organized under AOL Networks, AOL Studios and ANS Communications. ANS is the networking part that was sold to WorldCom. The heads of the three brand groups, Barry Schuler, Mayo Stuntz and Ted Leonsis, respectively, will all report to Pittman, previously the head of AOL Networks. Leonsis is now in charge of developing original content for all AOL and CompuServe’s online and web-based brands. Chief financial officer Lennert Leader will be appointed to the newly-created position of president, AOL Investments, overseeing strategic investments and reporting directly to Case. Leader will move over as soon as a new CFO can be found. In addition to managing AOL’s investment portfolio, comprising investments in public companies alone worth $200m, Leader will co-manage the company’s merger and acquisitions role with Miles Gilburne, senior VP corporate development.