The ambitious expansion plans of America Online looked decidedly rocky yesterday following investors’ indifference to the initial public offering of its Latin American offshoot.

A joint venture with Venezuelan media group Cisneros [WAMN, 12-Jul-00], America Online Latin America was forced to devalue its flotation pricing from the $15-$17 band to $8-$10 per share. Assuming the sale goes ahead, the final offer price will be decided later this week or early next.

The venture will focus on three of the biggest markets in the region: Brazil, Mexico and Argentina. The intention is to float 22% of the company’s shares with the two partners each retaining 39% after flotation

Analysts, wise, as ever, after the event, opined that the initial price range had been too ambitious. They cited investor uncertainties about the region's internet sector in general and about the prospects for AOLLA in particular.

“Having the AOL brand name is not enough,” said Tim Baker, an analyst at New York-based UBS Warburg. “They do not have strong local content and without the content it is difficult to get heavy traffic."

News source: Financial Times