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Swinging for the Fences

Useful interview with Steve Case ’80.

How do you bounce back after engineering a merger widely considered the worst in history? If you’re Steve Case, you keep swinging for the fences. In 2000, Case, then chief executive of AOL, decided to buy Time Warner for more than $160 billion in AOL stock. The market cap of the combined companies at the time of the merger: $350 billion. Today, almost $300 billion of that value is gone, and Time Warner’s stock price has been stuck in the high teens for most of the past five years. Although the media generally blame Case for the mess, he privately believes that the strategic logic of the merger was correct and that Time Warner bungled the management of the new entity.

Does Case really believe that or is he just saying that to be polite? It is hard to see how the world’s best manager could have saved AOL. It was ludicrously overvalued by the stock market in 2000. When that happens, the smart manager sells. By selling to Time Warner, Case saved himself tens of millions of dollars and the shareholders of AOL tens of billions.

In any event, the article is a good read. Did you know that Case was worth about $900 million?

Exercise for the students in Purple Bull: How much did Case save himself and his shareholders? Show your work.