$1 billion mark

CobraBoy (tbyars@earthlink.net)
Thu, 8 Aug 1996 18:54:39 -0700

America Online Inc. subscribers may have declared the service "America
Offline" during yesterday's unprecedented 19-hour
blackout, but there was
good news for the company today: Its revenues for the
year topped the $1
billion mark.

The timing couldn't have been better for the Vienna,
Va., company to announce
that earnings in its fourth quarter were $21 million, or
19 cents per share,
outdoing Wall Street estimates by 3 cents. Earnings in
the year-ago quarter were
$5.3 million. Revenues for the quarter hit $334.4
million, up from $151.8
million in the year-ago quarter.

A foul-up in an internal software upgrade shut down the
service until 10:45
p.m. Wednesday, with repercussions rippling across the
nation as E-mail
vanished and virtual storefronts folded. Users trying to
access stock prices, do
research or read online newspapers were bid "Goodbye
from America Online."

Company officials revealed in a press conference tonight
that the glitch resulted
from an error made by its networking subsidiary, ANS Co.
in Reston, Va., in
reconfiguring software, and from a bug in router
software. AOL officials would
not say who manufactured the router software.

In a statement this evening, AOL CEO Steve Case said,
"Because the AOL
system was down for maintenance at the time the
reconfigured ANS traffic
would have been received, the normal diagnostic systems
and processes were
not in place. When AOL tried to bring its system back
up, it appeared that the
installation of the new switches was unsuccessful,
because they were not

"Mistakenly, we attributed the problems to the
maintenance and installation
procedures we had just undertaken. Again, because we
were installing the very
pieces of equipment that would have indicated that the
ANS information was
misconfigured, our normal diagnostic systems were not in

The error will cost AOL about $3 million in rebates,
since the company has
promised a full day's refund to all users.

Despite the apologies, some users were still fuming tonight.

"I have been expecting an important E-mail on AOL. A
service with 6 million
people should not be down for almost 24 hours," griped
one subscriber who
asked not to be identified. "When I called tech support
at 10 p.m., they said
management didn't tell them what was wrong. It better be
an incredible software
upgrade for this amount of downtime."

It was unclear last night what will happen to the
millions of E-mail messages
sent during the outage, but servers could be swamped for
days to come.

Yesterday's problems come less than two months after AOL
reached a
preliminary settlement with the Federal Trade Commission
on rectifying alleged
unfair billing practices. Also in June, Chief Operating
Officer and President
William Razzouk stepped down after only four months on
the job.

The AOL outage was not the first of its kind: A 13-hour
blackout of Netcom
Online Communication Services Inc. occurred on June 19,
and The Microsoft
Network online service was shut down for 10 hours three
days later.

Shares of America Online stock were down $1.50 to $33.37
at the close of
trading today.


-= -=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=- Being a smartass beats being a dumb ass... you should try it sometime. -=-=-=-=-=-=-= -=-=-=-=-=-=-=-=- tbyars@earthlink.net