Don Logan’s genial ruthlessness in pursuit of dominion over America Online has been notable not just for its speed, but also for its effectiveness.
But turning around America Online will not be easy for Mr. Logan and Jonathan F. Miller, the division’s chairman, whom Mr. Logan, Mr. Parsons and Mr. Case hired last summer. Although America Online is still profitable and its margins are better than the parent company’s music and movie divisions, they are rapidly diminishing. America Online’s customers are increasingly shifting to high-speed Internet access, an area in which AOL faces much lower margins and much tougher competition. Its cash flow is expected to drop to $1.4 billion in 2002, from $2.3 billion in 2001, almost wholly a result of a drastic falloff in ad revenue. American advertising and e-commerce revenue, which totaled $2.3 billion in 2001, is expected to come in at $1.2 billion in 2002.