Since the first of the year, shares in Time Warner Inc. (NYSE TWX) have outperformed Yahoo!, eBay, Amazon and Google. Yes, Google. As Yogi Berra would say, "you could look it up."
Berra also said, "The future ain't what is used to be." For the new world of public Internet companies, that may be true. Google's shares are down about 2% since New Year's. For eBay, Yahoo! and Amazon, the figure is closer to a range of 35% to 40%. Of course, these were the companies some thought would ultimately run the likes of Time Warner, News Corp, and Disney out of town.
It also shows that the vilification of Time Warner may be drawing to a close. Why? Because the company appears to be atoning for some of the mistakes that it made in the AOL merger and its aftermath.
The list of "corrections" has already been well cataloged. AOL has a new model based on paid advertising instead of subscriber revenue. Time Warner indicates that the early returns on the process are promising. The Time Inc. group has decided that some of its smaller, and probably less profitable, magazines have to go. Time Warner Cable gets closer to spinning off shares to the public as each day passes.
The actions by the company still beg the question of whether what is being done is enough. Is the transformation as radical as it could be? Is there any reason to do things slowly and gradually?
Many Wall Street investors do not like the measured approach, but they have to admit that while most new media companies have been savaged in the market this year, Time Warner has not been.
Since a great deal of investing is done based on future prospects, the money in Time Warner is showing a level of patience with the company's metamorphosis that was missing four years ago when the stock was slaughtered. The company's shares even show some promise of breaking $20, which has not happened since April 2002.
The conventional wisdom was that putting money into new media would pay off handsomely. But, as Berra said, "Half the lies they tell me aren't true."
Douglas McIntyre is a partner at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
9-20-2006 @ 8:06PM
Mr. noitall said...
The one other major factor, which you forgot to mention, that has helped lift TWX. Is the recent addition of Bloggong Stocks to the AOL line-up.
9-21-2006 @ 9:33AM
Chris Tucker said...
With the comcast buy out or "merger" as some have put it, does this mean that my broadband internet access will fade away and I will end up with an AOL style portal? If, so, please cancell me now!
10-08-2006 @ 3:55PM
DRGTRADER said...
I THINK TWX CAN BE A HOME RUN! i'VE BEEN BUYING IT UP FOR THE PAST MONTH. MORGAN STANLEY'S DAVID GRIMALDI IS EXTREMELY BULLISH ON THIS STOCK. HE CITES A STRONG MS ANALYST REPORT AND THE TECHNICAL SETUP. THE PRICE IS FINALLY TRADING ABOVE ITS CRUCIAL 20 MONTH MOVING AVERAGE.
HAPPY TRADING!