AllThingsD » TWX

Time Warner's Q2 Gives Wall Street What It Wants

Peter Kafka — Wed, 04 Aug 2010 11:57:23 +0000

Quick summary of Jeff Bewkes’s Q2: a pleasant surprise. Time Warner’s (TWX) revenues of $6.4 billion and earnings of $0.50 a share were both higher than Wall Street’s expectations of $6.2 billion and $0.45, respectively. Conference call is at 10:30 am ET, and I’ll check back in then, but for now here’s J.P. Morgan (JPM) analyst Imran Khan’s take:

TWX reported revenue of $6.38B, vs. our estimate of $6.06B, up 7.7% Y/Y. Adjusted operating income of $1.20B was $90M better than our estimate. We note that the beat came from cable networks, which we see as higher quality than film.
Filmed Entertainment revenue was $2.52B, ahead of our estimate of $2.26B, up 7.8% Y/Y. Segment operating income was $173M, while we estimated $171M.
Cable Networks revenue was $3.17B, and Adjusted Operating Income was $981M, while we estimated at $931M.
Publishing revenue came in at $919M, in line with our estimate, up 0.4% Y/Y. Segment Adjusted Operating Income was $153M, vs. our est. of $142M.
Reported diluted EPS ex-items of $0.50, vs. our estimate of $0.44.
On the call we will be looking for commentary on the advertising market recovery and cable networks cost trends as well as for an update on capital allocation.

Time Warner Earnings: The Hangover

John Paczkowski — Wed, 29 Jul 2009 15:15:14 +0000

Time Warner’s second-quarter earnings beat analysts’ expectations. But that’s not saying much, really. Profits fell 34 percent to $519 million, or 43 cents a share, from $792 million, or 66 cents a share, a year earlier. Revenue was down nine percent at $6.8 billion.

Still, both figures exceeded the estimates of analysts, who had expected earnings of 37 cents on revenue of $6.97 billion, according to Thomson Reuters.

Revenue at the conglomerate’s studio, Warner Bros., fell nine percent to $2.3 billion despite some surprise box office hits like “The Hangover.” Meanwhile, revenue at the Time Warner (TWX) networks division was up five percent to almost $3 billion, despite a three percent drop in ad revenue.

And what of AOL? Time Warner’s soon-to-be-spun-off Internet division continued to be an albatross hung round the company’s neck. Its revenue dropped 24 percent to $804 million, dragged down by weak advertising and a continued decline in subscribers. Operating income fell 28 percent to $165 million. (See table below; click to enlarge.)

In a statement, CEO Jeff Bewkes said that Time Warner is “on track to spin off AOL to our stockholders around the end of the year. Separating AOL will benefit both companies–enabling Time Warner to concentrate fully on our core content businesses and improving AOL’s operational and strategic flexibility.”

Let’s hope so.

No Worries, Sergey. We Can Make It Back in a Week on Mesothelioma Ads.

John Paczkowski — Mon, 27 Jul 2009 23:08:21 +0000

When Google took a five percent stake in AOL for $1 billion in 2005, it valued the company at about $20 billion. Last year the search giant wrote down $726 million of that investment.

Now, according to a regulatory filing, Google (GOOG) has gone and sold its share back to Time Warner (TWX) for $283 million, about a quarter of what it originally paid. Which means that in four years, AOL’s value has declined from an estimated $20 billion to an estimated $5.7 billion.

What an amazing loss of value.

According to the filing, AOL, which will be spun off by Time Warner later this year, made $678 million of the $2 billion in advertising revenue it collected in 2008 from its search advertising partnership with Google. Quite a chunk. AOL CEO Tim Armstrong best hope he’s able to renew that partnership when it expires at the end of 2010.

Time Warner on AOL: We Ought to Have That Removed…

John Paczkowski — Mon, 06 Apr 2009 21:30:01 +0000

Here’s further confirmation that Time Warner (TWX) is looking to spin off AOL. In an SEC filing Monday, the company said it is seeking to amend debt agreements that restrict it from unloading the struggling business. Coming as it does after the hire of Tim Armstrong, a former Google (GOOG) executive, as AOL CEO and chairman, the move would seem to suggest that Time Warner CEO Jeff Bewkes has given up on the idea of an AOL merger with Yahoo (YHOO) and is pushing ahead full-bore with a spinoff that, frankly, always seemed like the most likely option. “We view this announcement as significant as it clears a major hurdle to spin AOL to Time Warner shareholders,” Michael Nathanson of Sanford Bernstein wrote in a note to clients Monday. “This potential move, along with the recent hiring of Tim Armstrong, suggests that the spinning of AOL could likely be announced in the next few months.”