New on America Online: Slash and Burn?

So why did AOL Time Warner move CFO Michael Kelly out of finance and into operations? Maybe his job was done.
CFO StaffDecember 17, 2001

Michael Kelly, who was recently replaced by Wayne Pace as CFO of AOL Time Warner Inc., has quite a way with people. Reports say he phoned up and dressed down two Merrill Lynch & Co. analysts who downgraded the company after a dismal third-quarter earnings release. Then he failed to return phone calls from those same analysts, the reports contend. Kelly denies the allegations.

The modus operandi, say some analysts, is typical of Kelly, who has reportedly incited the ire of divisional heads at AOL Time Warner with his recent aggressive cost-cutting. His new job, as COO of the America Online division, takes him out of the rarefied air of the corporate office, but makes him No. 2 man in a division that many call the company’s growth engine. While some say the move is a lateral one at best, others say it’s a vote of confidence.

If the company was unhappy with Kelly’s performance, asks James Goss, media and entertainment analyst at Barrington Research Associates Inc., “why put him in charge of the largest operating unit? It’s clear they felt he had the attributes, experience, and brains to bring to the table.”

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But some think that Kelly’s role as hatchet man at corporate made it tough for him to remain CFO once the work was done. “If [cost-cutting] was done in a way that was more harsh than the way someone else might do it,” says one analyst, “that would complicate issues. Kelly accomplished his task. There’s less of that hard job to do, and he was the best one to do it, so now he’s moving on to another role.”