What is AOL Time Warner ( AOL) waiting for?
ReconsideringSo what is in flux among the key issues affecting the stock? One element is the state of America Online's advertising business -- the very thing that got AOL Time Warner into its current mess. While other Internet companies were complaining of weakness in the online ad market, AOL Time Warner said its business was fine -- until it wasn't. Yahoo!, notably, got a jumpstart on AOL as far as restructuring its online ad business to contend with the new realities of an era not funded by venture capital and IPO money. But now that investors have pretty much beaten down all expectations for online advertising, things appear to be turning around. Though the company says online advertising in the first quarter was below the prior year's levels, much of the decline was due to bubble-era deals that expired over the past year; AOL Time Warner says the company is generating more new advertising business this year than it was last year.
|Slow and Steady? |
AOL creeping higher
And things are looking up all over for online advertisers: The Online Publishers Association trade group -- comprising major Web site operators not including AOL or Yahoo! -- said first-quarter online ad revenue at 24 member companies rose a total of 37.6% over the same period last year. A more potent unknown is when AOL's subscriber count will stabilize. The Washington Post reported Wednesday that AOL has lost more than a million dial-up subscribers since late last year, but a substantial decline was already expected. In Morgan Stanley's April 7 report upgrading AOL Time Warner, for example, the brokerage house forecast that the company's domestic subscriber count -- including both narrowband dial-up and broadband members -- would decline from 26.5 million at 2002's year-end, when the decline was already apparent, to 25 million at the end of 2003.