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AOL
Time Warner, the world’s largest media company, reported
a wider net loss for the fourth-quarter because of write-downs
to its investment portfolio. Its shares dipped on concerns
about an advertising slump but then recovered later in the
day.
The company posted a net loss of $1.8 billion, wider than
the $1.1 billion loss in the same period a year ago, due mainly
to a write-down of $1.7 billion reflecting the decline in
of its stake in Time Warner Telecom, a telecommunications
company, and in Hughes Electronics. The loss also includes
$45 million in merger-related costs.
Without the effect of those charges, the company reported
a 14 percent increase in earnings before interest costs, taxes,
depreciation and amortisation, the indicator that analysts
watch most closely. The rise was due largely to higher profits
from Warner Bros and cable TV systems. That figure, referred
to as EBITDA, rose to $2.8 billion, or 33 cents a share, from
$2.4 billion, or 28 cents a share, in the same period a year
ago. The latest earnings matched what analysts surveyed by
Thomson Financial/First Call had been expecting.
AOL’s stock has declined by about half since the middle
of last year as investors became disillusioned with the company’s
prospects for growth, especially at its AOL division, where
advertising revenues fell 7 percent in the fourth quarter.
Overall, the results were in line with a preliminary earnings
announcement the company made to investors on Jan 7, when
AOL also lowered its financial targets and said it would be
more conservative in its forecasting going forward. Investors
had criticised the company for setting and then failing to
meet aggressive growth targets last year.
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