AOL Falls on Time Warner Q4 Outlook

America Online, Inc. (NYSE: AOL) fell 6.72to 42.24 on Monday after merger partner Time Warner, Inc. warned of weakfourth-quarter results.

Time Warner said it will take a charge of US$20 million to $40 million in thequarter to pay for the restructuring of an agreement with Road Runner, ahigh-speed Internet service provider.

The restructuring, part of an agreement with the U.S. Justice Department inconnection with Time Warner’s acquisition of Media One Group, calls for TimeWarner Cable to increase its ownership in Road Runner and manage theInternet service’s operations.

The plan also clears the way for Time Warner Cable to offer multipleInternet services over its cable lines.

Time Warner said its fourth-quarter results will also be hurt by the”disappointing box-office performance” of the Adam Sandler film”Little Nicky,” as well as weakcable advertising revenue and slower-than-anticipated music sales.

As a result, the company said, earnings before income taxes and other itemsfor the year as a whole will grow at a rate of about 11 percent, instead ofthe 12 to 13 percent previously thought. Management remains “comfortable”that the company will see annual growth in total advertising revenue in the”mid-teens,” Time Warner said.

AOL, for its part, said its businesses are “on track to post record growthin the December quarter, with strong momentum in both membership growth andadvertising/commerce revenues.” Advertising and commerce revenue will be inline with analysts’ expectations, AOL said.

AOL’s membership recently passed the 26 million mark, with the companyclaiming strong growth in the United States and Europe. December 10th marked thesecond-best day ever for net new membership growth in the U.S., with about40,000 new AOLers signing up that day.

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