timewarner110206
On the homepage
Vikings
Out There
Pardon Board
Petters
Time Warner 3Q profit boosted by asset sales
Print this story
E-mail this story
Save to del.icio.us
Share on Facebook
Share on Digg
Minnesota business by the numbers
See Minnesota's top earning companies, CEOs and non-profits
More from Business
NEW YORK -- Time Warner Inc. posted sharply higher third-quarter earnings on Wednesday, but less some special items its profit fell short of analysts' expectations.
The company's AOL unit, which is revamping its business model, posted higher profits as it slashed marketing expenses for its dial-up access service. But AOL's revenues fell as subscribers dropped away faster than gains in Internet advertising.
New York-based Time Warner, which owns Time Inc., Warner Bros. and HBO, had earnings of $2.3 billion, or 57 cents a share, versus $853 million, or 18 cents a share, in the year quarter last year.
Revenues rose 7 percent to $10.9 billion from $10.2 billion. Analysts polled by Thomson Financial had been expecting revenues of $11.1 billion.
The earnings included 23 cents per share for discontinued operations related to cable systems that Time Warner has since transferred to Comcast Corp. as part of a three-way deal with Comcast to acquire the systems of Adelphia Communications Corp.
The figures also included 14 cents per share in gains from the sale of Warner Bros.' Australian theme park business, other asset sales and one-time effects.
Without the discontinued operations or one-time gains, the earnings were equivalent to 19 cents per share, up from 17 cents per share on a comparable basis in the year-ago period. Analysts polled by Thomson Financial had been expecting earnings of 20 cents per share.
On an operating basis before interest expenses, taxes, depreciation and amortization Time Warner's income grew 16 percent to $2.9 billion, led by gains at its cable TV business and at AOL. The company's cable networks and magazine publishing divisions also posted gains, while TV and movie programming declined.
The company's shares fell 43 cents or 2.2 percent to $19.58 in early trading on the New York Stock Exchange. The shares had been rising steadily since their $15.84 close on August 9, shortly after the company announced its new strategy for AOL. Longer term, the shares have been trading below $20 since May of 2002.
AOL posted a 21 percent gain in profits despite a 3 percent decline in revenues as the division cut back on marketing expenses for its dial-up Internet access business, which continued to dwindle rapidly.
AOL is in the midst of turning its business model away from charging for Internet access in favor of selling advertising online, a formula being followed successfully by Internet rivals Yahoo Inc. and Google Inc.
AOL lost another 2.5 million U.S. subscribers in the quarter, bringing its total to 15.2 million. Subscription revenues fell 13 percent to $210 million while advertising revenues jumped 46 percent, to $151 million.
This summer AOL said it would offer many of its services for free, including e-mail, as part of its business overhaul. On a conference call with analysts, CEO Dick Parsons said the company was "very pleased" with the way the strategy turnaround was going.
"It's a core asset, and I think we've got it on the right track," Parsons said of AOL.
Also, Parsons said the company was receiving an "awful lot of interest" in the 18 magazines that Time Inc. has put on the market, and had narrowed the field of bidders to about 8 to 10.
For the first nine months of the year, Time Warner earned $4.8 billion, or $1.13 per share, versus $1.4 billion, or 29 cents per share, in the comparable period last year. Nine-month revenues rose 2.8 percent to $31.8 billion.
The company also backed its previously announced full-year outlook of growth in operating income in the low double-digit percentage range, excluding the impact of the Adelphia transaction and other one-time effects.
Recent Business stories
Heinz to report its second-quarter results Tuesday - November 1, 2006
Heinz to report its second-quarter results Tuesday - H.J. Heinz Co. is scheduled to report earnings for its fiscal second quarter on Tuesday before the market opens. The following is a summary of key developments and analyst opinion related to the period. More
Blog: Patent Pending
Lights out at U energy conference. Irony police notified.
Just as Lawrence Kazmerski, a top official at the National Renewable Energy Laboratory, was about to give the keynote address at the University of Minnesota's annual E3 conference at the RiverCentre in St. Paul, the lights went out, bathing the audience in darkness and a deep sense of irony.
Comment on this story | Be the first to comment | Hide reader comments