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Case: 'It was bad day'
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August 8, 1996: 11:49 p.m. ET
AOL chairman confident that service's members will be forgiving over outage
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NEW YORK (CNNfn) - America Online Chairman and Chief Executive Officer Steve Case said while he regrets problems like the 19-hour system outage Wednesday, they are sometimes inevitable.
Appearing Thursday on Moneyline with Lou Dobbs, Case said he recognizes that many of the service's 6.3 million customers were angered by the outage.
"We tried to fix the system promptly and then posted a message saying we would credit their accounts. We are reviewing procedures to minimize the risk.
"When you're building a new medium and implementing new technologies, there will be risks," he said.
After AOL resumed operation Wednesday, Case posted a message to members apologizing for the problem and explaining the situation.
The outage occurred during routine maintenance that normally requires the system to be taken down for about two hours. Problems developed while new switches were being installed and those took longer than anticipated to resolve, he said.
While no one at AOL hopes an outage of that magnitude occurs again, Case said it's impossible to guarantee it won't happen.
"I would like to be able to tell you that this sort of thing will never happen again, but I can't make that commitment. I can, however, commit that we will do everything we can do improve quality and that when we do encounter problems, we will be candid about them."
AOL said it would provide customers with one free day of access. Case said the exact financial consequence that would have on the company has not been tallied. Some AOL customers pay $9.95 per month while other high-volume users pay $19.95.
Case said he was happy that the service has been able to deliver on the expectations officials set. Over the past year, the number of members has doubled and the service has tripled its revenues which topped $1 billion.
Case said he didn't expect the outage to drive users to the growing number of competitors. (222K WAV) or (222K AIFF)
While there has been a lot of discussion about the convergence of television and the Internet in the wake of plans by Phillips to introduce a WebTV, Case said that would not be detrimental to the future of traditional online services.
"It wouldn't do us any damage. We're an interactive service provider. We can deliver AOL through many devices or networks. We're working on a variety networks and devices.
"AOL is a package of services to make life easier, fun and more rewarding. We want to deliver that to tens of millions through a wide variety of distribution systems."
The AOL chief said company officials have their sights set on October when a new version of the AOL interface software will be realized. That realize will be accompanied with a new marketing campaign and new pricing structures.
After the close of trading Thursday, Dulles, Va.-based AOL reported profits for its fourth quarter more than tripled to $16.1 million, or 14 cents a share. Analysts had forecasted a 16-cent profit.
AOL's profits were dragged down by an $8 million settlement of class-action lawsuits over its billing practices. Without the settlement, net income would have been $21 million, or 19 cents a share.
For the year, the company earned $29.8 million, or 28 cents a share, on $1.1 billion in revenues, compared with a loss of $35.8 million, or 51 cents a share, on revenues of $394.3 million. It marked the first time revenues topped $1 billion.
Shares of AOL closed down 1-1/2 to 33-3/8 in Thursday trading.
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