Wall Street: Thursday close

REPORTS that media group

AOL Time Warner dropped 66 cents or 5% to $12.45 on a Washington Post report that the company booked $270m in revenues from questionable transactions. The company said its book-keeping complied with generally accepted principles of accounting. Later in the day, it announced a management shake-up which included the departure of chief operating officer Robert Pittman, who recently took over as interim head of the struggling AOL online service.

Quarterly earnings reports held the spotlight again with Microsoft leading the field. Microsoft fell 89 cents or 1.7% to $51.11 in regular trading and retreated to $50.66 in extended hours after its quarterly release failed to enthuse investors. The company called current conditions 'challenging'.

Techs were weighed down in part by a comment from Apple Computer chief executive Steve Jobs, who said he saw a 'bumpy ride' ahead: 'We don't see things getting better in the next six months, probably the next nine months, and that's as far as our headlights go out.' Apple shares, which plunged 12% on Wednesday after releasing a disappointing quarterly report, fell another 64 cents or 4% to $14.99.

International Paper topped earnings estimates, but analysts pointed out that much of the improvement was due to cost-cutting and not sales growth. IP shares dipped 54 cents or 1% to $39.66.

Philip Morris slumped $1.67 or 4% to $42.45 as it met Wall Street expectations, but offered a cautious outlook due to a planned increase in spending to boost its premium cigarette brands.

Pharmaceuticals maker Eli Lilly, off $2.36 or 4.6% to $48.54, semiconductor maker Advanced Micro Devices, down 61 cents or 6.5% to $8.72, and software company Siebel Systems, lower by $2.12 or 18% to $9.62, were among companies disappointing investors with their quarterly updates.

IBM firmed $1.36 or 2% to $72.05 despite reporting a sharply lower profit and suffering a downgrade by Bear Stearns. American Electric Power tumbled $3.14 or 9% to $31.31 as it warned that lower electric prices in the UK would cause it to fall below Wall Street expectations.