AOL announces massive loss; other problems face the company

America Online announced a quarterly loss of $155 million yesterday, blaming a $74 million GNN restructuring bill and a $24 million charge to refund subscribers. The loss was much higher than analysts expected, even when the restructuring bill and charge are removed. Revenues for the quarter exceeded $400 million, compared to $249 million in the same quarter a year ago.

AOL CEO Steve Case announced that the subscriber base had grown from 6 million to 8 million during the quarter and that advertiser revenue increased to $40 million. Of course, AOL's recent problems are related to the number of subscribers and their inability to get online. AOL is rushing to install more modems and increase their capacity.

Shares of America Online stock plummeted today as investors reacted to the quarterly loss and other bad news facing the company.

In an unrelated development, hackers have warned AOL that the online service will be "punished" on Valentines Day, February 14. The threats include wiping out AOL accounts and clearing chat rooms. AOL doesn't expect this to be a real problem but is nonetheless gearing up for the possibility.

Also on the bad news plate for AOL: A federal judge in Washington state has ordered the online service to stop seeking new customers there. The judgement is pending the outcome of a civil suit brought against AOL and is in effect for two weeks