Time Warner Inc.'s (NYSE: TWX) new Chief Executive Jeffrey Bewkes will have plenty to talk about when the world's largest media conglomerate -- and parent of BloggingStocks -- reports fourth quarter results tomorrow.
The results themselves aren't going to be anything spectacular. Analysts expect earnings of 29 cents on revenue of $12.64 billion, according to Thomson Financial. As usual, the focus will be on AOL, in particular how much gains in advertising offset the declines in the dial-up business. Also, the company will need to detail its plans for the cable business which may be hurt by an economic slowdown. The future of the publishing business also remains in doubt as advertisers continue to flee print for online media.
Microsoft Corp.'s (NASDAQ: MSFT) $44.6 billion bid for Yahoo Inc. (NASDAQ: YHOO) only adds to the confusion. Will investors give Bewkes enough time to transform AOL's business to an ad-supported model? The strategy is the correct one though it was initiated about two years too late. But given the premium that Microsoft is offering for Yahoo, investors are bound to pressure Bewkes to make a similar deal for AOL, which today bought the online marketing company buy.at.
The picture isn't entirely bleak for New York-based Time Warner. The company's CNN cable channel should benefit from a contentious presidential campaign which has helped boost its ratings. Other channels such as Comedy Central, TBS, and TNT should benefit from the expected resolution of the Hollywood writers' strike, as will the Warner Bros. studio.
Believe it or not, Wall Street remains bullish on Time Warner's stock. The average price target of analysts is $22.27, well above the $15.63 where it recently traded. In other words, they believe the bad news may have been priced into the stock.
Of course, people have lost plenty of money over the years waiting for a Time Warner turnaround. Unless some drastic moves are made, it's seems unlikely that the stock will do much of anything.
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