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It is hard to imagine that Time Warner (NYSE:TWX) could have turned in a worse quarter. Even given the economic downturn, it has to be an embarrassment for Jeff Bewkes who has been CEO for a year. He was supposed to turn around Time Warner's flagging fortunes.
The firm said Q4 revenues declined 3% over the same period in 2007 to $12.3 billion, driven mainly by decreases at the filmed entertainment, AOL and publishing segments. AOL just replaced its head of sales and announced it was cutting 10% of its workforce, so bad news from that division was anticipated.
In Q4, revenue at AOL sales fell from $1.3 billion to under $1 billion. Publishing sales dropped from $1.5 billion to $1.3 billion. Cable revenue moved up almost 10% to $4.4 billion and network sales were up slightly to $2.9 billion.
TWX had an operating loss of $22.2 billion, a decline of $24.5 billion compared to the year-ago quarter. The huge fall in operating income was due largely to a $24.2 billion non-cash impairment to reduce the carrying value of goodwill and intangible assets. These write downs were remarkably large at the company's cable, AOL, and publishing units. Cable took a hit for goodwill and intangible assets of $14.8 billion. At publishing the number was $7.1 billion and at AOL the hit totaled $2.2 billion. It is an accountant''s way of saying that these units lost much of their value.
TWX guidance for next year excludes the cable business which is being spun off early in 2009. Earnings per share are expected to be flat. The firm forecast its 2009 full-year adjusted diluted income per share from continuing operations to be around $.66 in 2008. Put another way, 2009 will be bad, but it may not be a catastrophe.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
2-04-2009 @ 8:36AM
mike hulgin said...
It is almost hard to believe that TWX could lose that much $. They charge way too much for what they give in return. My internet with them went up and I was never even given a notice ? How do U do business like that ? U couldn't give me there Cable for TV, and I did say GIVE. During Football Season U get what u get. With DTV, I can watch any and ALL the games that are being played. No thanx TWX....
2-04-2009 @ 9:31AM
BHarrison said...
The cable service support business is really a draconian and overly expensive structure. Based on my experiences in the past, their service organizations are extremely inefficient. They use several layers of "service" that increases the labor costs significantly. (The first guy basically checks to see if the converter box is plugged into the power outlet and the coazial cables . . . otherwise they can't "do" or determine anything else.)