Growth ConcernsOn Tuesday, Sanford Bernstein analyst Tom Wolzien pointed to growth concerns as the biggest drag on AOL's stock. Through the decades, Bernstein says, AOL Time Warner predecessor Time, Inc. had made a habit of buying growth through purchases of media properties including television stations, cable TV systems, Ted Turner's cable programming empire and, most recently, America Online. "What's happening now is the growth they thought they bought isn't there," says Wolzien. The question Wolzien says he's struggling with, relative to AOL Time Warner and other media companies, is how to value them now that the market looks at them as "real stocks, rather than something special," in his words. "Now that they can be looked at on a a P/E basis, the question is where they belong on a P/E basis." Wolzien downgraded his rating on AOL Time Warner last week from outperform to market perform, writing, "We do not think it appropriate to recommend the stock of a company under SEC investigation." Bernstein hasn't done recent investment banking for AOL Time Warner.
Chew on ThisNot that the fall of AOL Time Warner's stock hasn't already caused enough pain for employees and other stockholders, but the historical performance of the stock may be worse than is commonly represented in the media.
|Taking the Long Way Home |
Time Warner's stock last hit $17 in 1996