Time Warner posts $16 billion fourth quarter loss
05 Feb 2009
Time Warner Inc on Wednesday posted a $16 billion net loss in the fourth quarter due to several write-downs indicating tepid growth prospects for big media during the economic downturn.
The media and entertainment giant wrote down the value of intangible assets held by the company's cable operations as well as AOL and Time Inc on big charges. Revenue for the quarter fell short of Wall Street expectations, as the company cable operations came under increasing pressure on falling subscriber numbers and declining advertising rates.
The company's shares 3.7 per cent to close at $9.42.
According to the company, it lost $16 billion, or $4.47 a share in the fourth quarter. This is a sharp reversal from the $1.03 billion, or 28 cents a share profit, the company reported for the final three months of 2007. It added it would have earned 23 cents a share in the last three months without the charges.
Quarterly revenue declined 3 per cent to $12.31 billion.
The company has seen bigger losses in the past and analysts point to the losses of $54 billion and $54 billion in two quarters of 2002.
The company ceo Landel Hobbs said on Wednesday that the company will cut around 120 jobs in a restructuring effort.
Analysts say the cable networks operations was a bright spot as ad sales actually grew in contrast to other operations.
At AOL, revenue declined to $968 million from $1.25 billion, according to Time Warner.
Advertising revenue was down 18 per cent in the latest quarter from the prior year, in an extension of the slide for the online unit.
Ad revenue continued to with constantly falling growth figures over the previous quarters; it plunged 17 per cent in the third quarter.
Chairman and ceo Jeff Bewkes said the company has to still decide what to do with AOL.
"There's a scenario where we could spin off all or either of the parts of AOL. It has also ... been discussed as to whether AOL would combine any of its assets with some other operating companies to increase scale on all sides. I can't and -- I'm just not able for obvious reasons to tell you which -- of those courses we may end up taking," Bewkes said on a conference call with analysts.
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