By ridding itself of Internet cheerleader Robert Pittman and replacing him with two battle-hardened media executives, AOL Time Warner has solved one of its most pressing short-term problems. But the world's largest media company still has plenty of work cut out for itself.

— For one, its stock is tanking. Investors don't like the fact that the key America Online division is sputtering and that the company failed to live up to promises of rapid growth and greater cooperation among the conglomerate's far-flung media holdings. As a result, the stock is off 60 percent so far this year, and it fell again in heavy trading Friday.

— People are still trying to figure out who is in charge. After the merger closed, Pittman was seen as a key point man. Now he's out, and the soft-spoken Richard Parsons is CEO. Former chief executive Gerald Levin retired unexpectedly last year, and the company has also replaced its chief financial officer and the heads of its AOL and cable TV divisions.

— Defining a strategy for AOL. At first seen as the catalyst that would transform the rest of AOL Time Warner, America Online is now more like a sick patient who needs urgent medical treatment. Online advertising is falling sharply, and it's still not clear how AOL will convert users to highspeed data connections and expand its business now that the dial-up Internet service business is maturing.

— The company's organization still seems to be evolving. Prior to the merger with AOL, Time Warner's vast media holdings, which include Time magazine, CNN and Warner Bros., were run as separate fiefdoms. Pittman tried to exert central control over AOL Time Warner's sales operations but with limited success. Under the new regime, the company will be split into two separate divisions headed by hands-off managers.

Even before it tackles these strategic challenges, there's still a senior post to fill: Pittman's interim job as chief executive of America Online. Pittman had been installed there just three months ago in an attempt to turn around AOL's deep problems, mainly a drop in advertising revenues.

News leaked out last week that AOL Time Warner was already looking for a new chief executive for the AOL division and had retained the executive search firm Spencer Stuart. That spelled trouble for Pittman, who was already rumored to be on the outs with many parts of Time Warner's businesses, partly because of a brash management style.

While a new head for America Online is expected to be found quickly, the once high-flying business has a long way to go before investors start believing in it again. A report in The Washington Post Thursday called into question several techniques that AOL had used to boost its revenues, sending the company's stock lower.

Also, AOL has not yet made clear how it plans to convert more of its 34 million subscribers to higher-cost services such as highspeed modems. It also hasn't cut major deals with cable TV providers to carry AOL as an Internet access service on their lines, a key element needed for future growth.

``It is still necessary to hire an AOL division CEO, outline a strategy and begin executing before investors will be willing to pay a higher (price) for the AOL division,'' Drew Marcus, an analyst with Deutsche Bank Securities, wrote in a note to investors Friday.

Pittman will stay on until a successor is found to lead the AOL business. In the meantime, the company's operations will be divided into two distinct units, each headed by a veteran operating executive from the Time Warner side of the company.

HBO chairman Jeff Bewkes will lead the company's entertainment and networks businesses, which include HBO, New Line Cinema, Turner Networks, the WB network, the Warner Bros. movie studios and Warner Music.

Don Logan, the chairman of magazine publisher Time Inc., will be in charge of a new media and communications group that will include the company's subscription-based businesses such as AOL, the Time Inc. magazines and Time Warner Cable, the nation's No. 2 cable TV operator.

In a note to employees, Parsons acknowledged that the changes followed a ``period of tough going for our company.'' But he dismissed the concerns about the company's accounting raised in the Washington Post story and said the elevation of Bewkes and Logan marked a ``turning point.''

``Getting AOL Time Warner on track and moving ahead as a united company, with one heart, spirit and purpose, remains our central challenge,'' Parsons wrote, adding that ``achieving that unity of vision and execution has proven harder than we first thought.''

Investors remained skeptical. The company's shares declined 87 cents in heavy trading Friday to close at $11.58 on the New York Stock Exchange.