AOL shares dropped 1-1/8 to close at 24-5/8. But during the day, the online service provider saw its stock sag as low as 24-1/8. The 52-week closing low for AOL is 24-1/2.
"AOL has always been a volatile stock," said Paul Saunders, analyst with Van Kasper & Company. "Lately, it's fallen out of favor with Wall Street based on the perceived competition from Microsoft and the Internet."
Microsoft unveiled its new Internet-based service Thursday, which offers a lower price for its basic access. Microsoft saw its share price rise 3-3/8 to close at 137-1/8.
"Investors who are bearish on AOL also say the company inflates its current earnings, even though the company said its accounting practice is common among subscriber services," Saunders added.
He noted this long-standing issue involves how AOL accounts for expenses. The online service, rather than take expenses in the current quarter, will amortize them over time.
"The bears say if AOL would expense each quarter, their earnings would be lower than they are," Saunders said.