Updated from 9:01 a.m. EST
Media conglomerate Time Warner (TWX - Get Report) plans to separate its struggling AOL unit's Internet access business from its Web portal and online advertising components, CEO Jeff Bewkes said Wednesday.
Bewkes announced the plans in a conference call to discuss the company's fourth-quarter and full-year financial results, which were roughly in line with Wall Street's expectations, as strong gains in cable television offset sliding revenue at AOL.
The CEO also suggested the company may reduce its stake in Time Warner Cable. Shares were recently rising 4.5% to $16.09.Time Warner earned 28 cents a share in the fourth quarter, vs. 43 cents a share in the year-ago period, but those results were impacted by one-time items that decreased the current quarter's results by a penny a share and increased last year's quarter by 21 cents a share. Fourth-quarter revenue gained 2% to $12.64 billion. Analysts polled by Thomson Financial expected a profit of 29 cents a share on revenue of $12.65 billion. For the full-year, the company posted diluted income per share of $1.08, vs. $1.20 a share in the year-ago period. One-time items bumped up results by 12 cents a share and 40 cents a share, respectively. Revenue jumped 6% to $46.5 billion. Analysts expected a profit of 96 cents a share on revenue of $46.46 billion. Time Warner managed the revenue gains, despite a steep slide in subscription revenue at AOL. For the year, AOL's revenue slid to $5.18 billion, vs. $7.79 billion in 2006. The results were due to a 52% slide in subscription revenue, though advertising revenue gained 18%. The company last year sold its Internet access business in the U.K., Germany and France, contributing to the decline, and saw domestic revenue decrease as it offered email and other products to consumers for free. Those losses, however, were offset by strong growth in cable television revenue, which grew to $15.96 billion, from $11.77 billion in 2006. "I'm pleased that our company met or exceeded all of our financial objectives last year," CEO Jeff Bewkes said in a company statement. "Looking ahead, we've identified key initiatives that will enable us to deliver strong business results long into the future while increasing our returns to our shareholders." Additionally, Time Warner said it expects to report full-year diluted earnings per share of between $1.07 and $1.11. Analysts expect a profit of $1.11 a share.