AOLTW REPORTS A SOLID
FIRST QUARTER

While other companies have been all gloom-n-doom with their recent financial reports, media giant AOL Time Warner Wednesday (4/18) painted a sunny picture, reporting higher first-quarter earnings, largely due to strong growth in its online and cable television subscription businesses.

While Wall Street analysts expected cash earnings of 18 cents to 26 cents a share (with an average estimate of 20 cents), AOLTW reported its cash earnings per share rose to 23 cents a share from 19 cents a year earlier on a pro forma adjusted basis. The company only provided cash earnings data on a per-share basis.

Including a $620 million charge for investment write-downs, as well as goodwill amortization, merger-related items and other costs, AOL Time Warner posted a net loss of $1.4 billion, or 31 cents a share. That was narrower than the year-earlier loss of $1.5 billion, or 34 cents a share.

Revenues rose 9 percent to $9.1 billion, compared with $8.3 billion a year earlier.

Year-ago results were reported on an adjusted pro forma basis, assuming that the $106.2 billion merger of AOL and Time Warner had been completed on Jan. 1 (even though it actually closed on Jan. 10), and excluding merger-related expenses—like hookers, booze and porn.

First-quarter earnings before interest, taxes, depreciation and amortization, or—say it loud, say it proud!—EBITDA grew 20 percent to $2.1 billion, which was in line with analysts' expectations.

The positive report goosed AOLTW stock, which rose to $49.01 at market close on Wednesday from a Tuesday close of $43.90.

"AOL came in with a surprisingly strong quarter in the face of a very difficult environment," said one Wall Street analyst whom we’ll call Thu’ulek The All-Seeing. "It shows the fortitude and power of this extremely well-entrenched company and that it is proving not especially sensitive to the recession or the dot-com ad bust. Just imagine what they could do if they sold porn!"

Time Warner Cable's digital cable and high-speed modem subscriptions quadrupled during the year to 3.3 million. Total subscriptions at the company grew nearly 16% to more than 133 million, with membership at AOL's flagship Internet service recently topping 29 million.

The company said adjusted revenues at its AOL online unit rose to $2.12 billion compared to pro forma $1.81 billion, with ad and commerce revenues up 37% to $721 million. EBITDA at the unit rose 35% to $684 million, slightly below some analysts' estimates.

Revenues at Warner Music Group fell 6% to $881 million, compared with many analysts' expectations for flat to slight growth. EBITDA fell 7% to $94 million.

AOL Time Warner said about two-thirds of the decline was due to currency exchange.