High Anxiety at Time Warner
The Internet bubble is long gone, but AOL talk continues to dominate the agenda at Time Warner (TWX).
The New York media giant is due to post third-quarter earnings Wednesday morning. With investors tapping their collective foot, Time Warner's board met last Thursday to discuss America Online. A decision on AOL's strategic course isn't imminent, according to sources, but a new heading could be set within weeks.
In the meantime, the company's slow growth continues to elicit groans. Analysts polled by Thomson First Call expect Time Warner to post earnings of 18 cents a share on $10.38 billion in revenue. That points to year-over-year revenue growth of just 4.2% and compares with a year-ago profit of 15 cents a share on revenue of just under $10 billion.
"Third quarter results should mark the fifth consecutive quarter of single-digit (or worse) growth with every segment (ex networks) growing below double digits," said Goldman Sachs analyst Anthony Noto in a recent research note. Noto links Time Warner's soft numbers and the AOL decision, saying, "We continue to believe that the greatest swing factor for valuation is turning AOL into a growth business, which has limited visibility."Surprising just about everyone, AOL has in the past two months reversed its long fade into oblivion by emerging as the most sought-after property on the Internet. The company's cash cow dial-up business has been bleeding subscribers for years, but its string of online Internet Web sites has made AOL the favored partner of big rivals. Since September, AOL has held talks with Comcast (CMCSA) and Google (GOOG), Microsoft (MSFT) and Yahoo! (YHOO), as various players admire the company's vast reach and others seek simply to play spoiler to some of their foes. Last week, Time Warner
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV