Time Warner beat second-quarter earning estimates, posting revenues of $11.55 billion against Wall Street's guess of $11.45 billion. But AOL, the company's online division, which is strangely coveted for acquisition by both Yahoo and Microsoft, didn't do nearly so well, reporting a 15 percent revenue decline to $1.05 billion. A shrinking Internet-access business is mostly to blame for the drop, but execs said AOL's online-advertising division didn't help much either. It grew only 2 percent, primarily on the strength of ad sales on third-party websites. AOL's owned-and-operated websites lost revenue. In good news for shareholders, the company did not have any news to report about improper vote counting at the company's last shareholder meeting.

It is one of the wonders of America, that business celebrities like junk-bond salesman Michael Milken can be disgraced and then redeemed, often within the span of a decade. Tarnished former media mogul and social climber, Bob Pittman, has secured the first big payday of his new career as an internet investor: his Daily Candy, the email newsletter for women who buy handbags, has sold to cable giant Comcast for $125m, according to Silicon Alley Insider. That's more than had been rumored, and way more than Pittman in 2003 paid for his stake: $3.5m.

Skanky-chic clothing retailer American Apparel reached nearly 48.9 million unique Web surfers with 489 million display ad vews in the month of April according to ComScore, with 24 percent of those impressions being garnered on MySpace, 19 percent on Facebook, and another 12 percent on AOL's banner-laden AIM software client. The ads have stirred controversy for the prurient use of Helvetica. How's it affecting the bottom line?The company raked in $111 million last quarter, a 50 percent increase year over year — though the company's bookkeeping is notoriously unreliable, the share price is down to an all-time low, and a fifth sexual harassment suit is still pending against visionary pervert Dov Charney, founder and CEO. That explains why American Apparel is so happy to advertise on the social networks that frighten more staid brands: The rates are cheap, and the company doesn't have to worry about tarnishing its reputation.

When it releases its second-quarter numbers Wednesday, Time Warner will also announce it's ready to dump AOL's dialup business. A combination of modem banks, CD-ROM mailers, and ruthless telemarketers which introduced America to the information superhighway in the 1990s, AOL's ISP business still has more than 8 million subscribers who pay through the nose for a quaintly overpriced service. What will be left: A collection of websites and an online-advertising business that has yet to get advertisers to pay anything even vaguely overpriced. Time Warner has flirted with Yahoo and Microsoft for years, but hasn't yet sealed a deal to get rid of AOL, the business which, on paper, acquired Time Warner at the turn of the millennium.But Microsoft and Yahoo, both looking ofr more heft, are still in talks to buy AOL. Once the separation — mostly "a bookkeeping exercise," reports the Wall Street Journal — is complete, selling off the advertising business should prove easier. Discussions with Yahoo are "the more advanced of the two," says a source who describes the deal as one that would combine AOL and Yahoo and give Time Warner a $10 billion stake in the company. It's a proposal AOL and Yahoo began discussing in April. Whether or not a deal is consummated, the fact that Yahoo CEO Jerry Yang is still considering it just shows how much pressure he's under from shareholders, even after last week's subdued shareholder meeting.

• Time Warner is getting ready to sell off its AOL dial-up business and may announce a deal this week. [WSJ]

Right as former AOL CEO Jon Miller gets a glowing profile in the Los Angeles Times, his former boss strikes back at him in the most callow way possible, by blocking his appointment to the Yahoo board. Was it not enough for Time Warner CEO Jeff Bewkes to ignominiously sack Miller two years ago, replacing him with the hated and ineffective Randy Falco, who instantly sent AOL's recovering business into a tailspin? Of course not! The media boss is enforcing Miller's noncompete agreement, blocking him from even working at Yahoo as a director — after Yahoo CEO Jerry Yang, who championed Miller's cause, had already announced he would join the board.

"I read your post on how some of the AOL/Weblogs bloggers are blogging for free. I don't know who the bloggers are or which blogs within the portfolio this applies to either. I was recently hired (signed a contract) to write for one of the blogs. Last week, the blog I'm with sent out a note to all the members of the team that everyone except for lead bloggers and paid staff should refrain from posting until August because of a budget shortfall. On the blog I was hired to write for, we receive just $X [redacted] per post, features (slideshows and such) are paid at a higher rate. I think some bloggers continue because they feel a sense of mission and duty and are really into it. [Emphasis added] I will not write for free."

"Brad says some bloggers have taken it upon themselves to keep writing, gratis. He stresses that those bloggers who have done it are doing so on a strictly volunteeer basis, and will start getting paid again for their work next week." [Silicon Alley Insider]

If you ever wished that a spammer would die, die, die, congratulations — you got your wish. But we hope that hearing the fate of Eddie Davidson doesn't make you feel smugly self-satisfied. Davidson of Benet, Colo., one of several convicted "spam kings," walked away from his minimum-security prison camp and shot himself, his wife, and his 3-year-old daughter, Department of Justice officials said Thursday. Davidson's spam scheme involved sending out massive volumes of emails with manipulated headers to pretend they were from legitimate companies pushing penny stocks.He would earn a fee from an unnamed third-party company based out of Houston based on the number of emails he sent out. In the years that he was active, between 2003 and 2006, the DOJ claims he had over $3.5 million deposited into his bank accounts. Davidson plead guilty to falsifying header information to send spam; tax evasion; and criminal forfeiture. He'd been sentenced to spend 21 months in the minimum-security prison, as well as ordered to pay $714,139 in restitution. Happy with the payback?

Perhaps readying itself for a sale to Microsoft or Yahoo, Time Warner company AOL began cutting costs yesterday. One memo, from Kevin Conroy, AOL’s EVP of Products and Marketing, told employees AOL will "sunset" products Bluestring, Xdrive and AOL Pictures. MyAOL will go into maintenance-only mode and investment in AIMWorld — we've never heard of it either — is done. In a second memo, AOL subsidiary Weblogs Inc asked its pay-per-post bloggers writing for Diylife.com, The Unofficial Apple Weblog, and DownloadSquad to stop filing until July 31. (Photo by AP/Sakuma)

Everyone wants a piece of beloved former AOL CEO Jon MIller, who was oh so unfairly fired, loyalists say, by Time Warner CEO Jeff Bewkes. First gossips suggested Miller as a fit to replace ineffectual Yahoo CEO Jerry Yang. Then, on Monday, Yang himself said Miller would fill one of Carl Icahn's new seats on the Yahoo board. Now, a source tells Kara Swisher that Miller is "one of the top outside candidates on the list" to head Microsoft's new Online Services division. Maybe everyone can stop moaning about the way Bewkes handled Miller's dismissal now?

In an entirely punctuated memo posted to Yahoo's corporate blog and the SEC, Yahoo CEO Jerry Yang — or his ghostwriters — declared that yesterday's agreement to give corporate raider Carl Icahn three board seats and avert a proxy fight allows Yahoo "to get back to the business at hand." But while Yahoo will soon enough be able to focus on doing what it does best — losing market share to Google and talent to startups — Yang and the board still have one more task at hand: filling out its expanded board with Icahn-approved nominees. Bet that one of the names will be fired AOL chairman and CEO Jon Miller. Though not included on Icahn's original slate of alternative directors, Yang mentioned Miller by name in his memo as a potential new board member.

Behavioral targeting is all the rage in online advertising. The technology aims to show ads to Internet users based on the sites they visit and the actions they perform, rather than targeting words they search for, as Google does, or matching advertisers' desired demographics to a site's audience, as most banner-ad purchasers do today. ValueClick has introduced its own product, in competition with AOL's Tacoda and Yahoo's BlueLithium. But ValueClick's executives may not be particularly confident in the product — if rumors are true that they're talking to startup Revenue Science about an acquisition. Revenue Science has raised more than $70 million in venture capital, and recently appointed former ValueClick executive Jeff Hirsch as its CEO.

Ted Leonsis never spent a dollar he didn't think would somehow change the world. And after generating a few billion at AOL, buying a hockey franchise and dabbling for a while in Web 2.0, it was just a matter of time before he jumped into movies, where change follows the money faster (and certainly more glamorously) than any other industry in which he hadn't already staked a claim. And, like untold scores of entrepreneurs before him, Leonsis's first couple tries — as producer of the documentaries Nanking and Kicking It — flailed in the marketplace. That'll happen.

• JPMorgan announced that profits fell 52% due to write-downs, slightly less than the Street expected. [Bloomberg]

Convicted "Spam king" Adam Vitale was sentenced to 30 months in prison Tuesday, for spamming more than 1.2 million AOL subscribers. Vitale had boasted of using 35,000 proxy computers to bypass AOL's spam filters with greater than 80 percent successful delivery to members.

An AOL team of negotiators is in Seattle right now, trying to sell the business to Microsoft for a price somewhere between $10 billion and $15 billion. An AOL source told Silicon Alley Insider the probability that a deal gets done on this trip is "low/medium." Perhaps in an effort to speed the proceedings and ignite a bidding war, another source told Reuters that AOL-Yahoo merger negotiations — on since April — "have taken on new urgency." If such a bidding war goes down, bet that AOL goes to Microsoft, which has more cash than Yahoo. More importantly, CEO Steve Ballmer will refuse to get left at the altar by Yahoo CEO Jerry Yang again.

AOL has launched Walletpop, a personal-finance site; IAC and Dow Jones have FiLife; and TheStreet.com has MainStreet.com. All hope to attract a younger audience to personal-finance news than the conventional stock talk and online portfolios offered by the staid likes of Yahoo Finance and CNNMoney. The bets are wrong both in their timing and their premise. Stockbrokers and mortgage lenders, reliable advertisers during good times, are both ducking for cover and pulling back their budgets. Froth might have sustained these sites a couple of years ago, but not now. No matter when they launched, though, their proponents should have remembered this maxim: Financial advice, like youth itself, is wasted on the young.

• Did Goldman Sachs have a hand in the downfall of Bear Stearns? London-based traders at the firm are now under investigation for spreading negative rumors [WSJ]

• The controversy over the Obama New Yorker cover rages on. The mag says it's received a flood of angry letters, although we're pretty sure David Remnick is the happiest he's been in months. [WWD]