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Updated from 6:58 a.m. EST

As two midtown heavyweights prepare to weigh in, Wall Street is starting to wonder if either packs enough wallop.

Media titan

Time Warner


and online services giant



are due to post third-quarter numbers Wednesday morning. Investors expect to see solid profit gains, tempered by eroding sales and looming competitive questions.

Though they run very different businesses, Time Warner and IAC face similar obstacles. Both conglomerates are run by respected executives who haven't quite been able to convince the market that the worst is behind them. Both have Wall Street concerned about acquisition strategies -- either the challenges of integrating acquired companies or the prospect of overpaying for future deals. Both have seen their shares decline this year in spite of progress on various fronts.

Spicing up the mix, each company boasts a devoted fan base. Time Warner backers insist that the company's America Online division, a drag on the company's stock, has an underestimated potential (although the unit

reportedly is preparing another round of job cuts). IAC supporters bristle at skepticism about the company's margins, its relationships with big partners and the valuation of its shares.

For Time Warner, Wednesday's assignment is to show shareholders it is keeping pace with peers as diverse as


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. For IAC, the chore is illustrating how it is fending off the advances of



while grappling with tight-fisted hotel and car rental chains.

On Monday, Time Warner slipped 26 cents to $16.38, and InterActive rose 32 cents to $21.94.

Parsons' Project

Time Warner's quarterly report always stands out because of the many subplots unfolding at the company. After a sinking spell following the infamous AOL merger, Time Warner has stabilized under the leadership of CEO Dick Parsons. He has focused on cleaning up the balance sheet and looking for opportunities in the cable business, which right now stands as the company's main growth engine.

The last quarter has brought much talk on that front. Time Warner and Comcast have moved to make a joint bid on some assets in the forthcoming auction of


properties, but that process remains something of a mystery, and the fear that Time Warner will spend big on Adelphia has been a major damper on the company's stock. Time Warner and Comcast also joined with the New York Mets baseball team to set up a New York region cable sports network, leaving rival



furiously filing legal motions and terse press releases.

Also lingering over the company is an ongoing

Securities and Exchange Commission

inquiry into various business and accounting practices.

With competition pressing in and the stock failing to find a bid, Parsons may be feeling some pressure to match recent stock-bolstering moves at Viacom and Comcast. Viacom last week set an $8 billion stock buyback and boosted its dividend. Comcast spent more than $500 million over the last quarter on its own buyback. Wall Street may be looking for Time Warner to throw stockholders a bone of their own.

Wednesday morning, Wall Street analysts expect Time Warner to post third-quarter earnings of 14 cents a share, up from 12 cents a year ago. Sales are expected to rise 4% from comparable figures to $9.87 billion. Operating income before depreciation and amortization, also known as OIBDA, is expected to come in around $2.3 billion.

Diller's Crossing

If anything, IAC chief Barry Diller may be feeling even more pressure. While Time Warner shares have dropped 10% this year in a tough market for media stocks, InterActive shares have plunged 40%, pounded by a slowdown in the company's closely watched online travel unit.

Still, Diller has shown he won't be cowed. The executive told investors and analysts at last month's Goldman Sachs Communicopia conference that he was far less interested in share buybacks or take-private scenarios -- two ideas that were much discussed on Wall Street amid a brief revival in IAC shares late this summer -- than in capitalizing on a big growth opportunity.

"We are a young company," Diller said Oct. 5 at the conference in New York. "There is opportunity out there, and we don't really know its size."

Diller's stand comes just as investors are worrying that maybe the opportunity isn't as big as they hoped. IAC shares are fetching barely half their early-year peak of $38, and the compeititon is only increasing. This fall travel services conglomerate



rolled out a $1.2 billion deal for airline ticket site



. There's also talk of a big online travel push by Yahoo!

The company hasn't bowed to growing competition, but IAC was forced to trim its growth forecasts in August. The company backed away from its claim that it could boost profits 30% annually, blaming a slowdown overseas. With Wednesday's report, investors will be eager to see how margins in the travel business hold up. They have been dropping in recent quarters, and if that trend continues, it may penalize the stock even further.

On Wednesday, analysts surveyed by Thomson First Call expect IAC to earn 21 cents a share, up from 17 cents a year earlier. Revenue is expected to fall 6% to $1.51 billion.