Despite a solid article from Barron's titled, "Time Warner Can Get Out of Neutral," a crummy market on weak financial data and a weak tech and media day took shares of Time Warner Inc (NYSE: TWX) down. We had some profit-taking on a higher-volume day with the stock closing down 0.68% at $17.49 with 32.2 million shares trading hands.

Time Warner also secured the $365 million cash terms from Neuf Cegetel for its AOL France unit. Even Forbes gave it a positive article on its recent efforts.

The company also secured a much higher stake sale in the Time Warner Telecom (TWTC) secondary coming in at 39.6 million shares at a $17.50 pricing.

TWX options were quite a bit more active than we have been seeing, and this is representative of investors usually warming up to a name:

• -about 8,000 of the OCT Calls trading,
• -over 5,000 of the NOV Calls trading,
• -almost 13,000 of the JAN 07 calls trading,
• -and over 17,000 of the APR 07 $18 Calls trading in that contract alone.

Today's drop was more systematic of a bad market and profit taking than a change in all of the positive developments brewing to unlock the TWX shareholder value.

Time Time Warner Inc. (NYSE: TWX) issued a press release this morning discussing its agreement for the sale of its AOL France access business to Neuf Cegetel. Time Warner is selling the unit for some 288 million Euros, or about $365 million in currency adjusted terms, in an all cash deal.

Neuf Cegetel will acquire AOL's French Internet access business, including 500,000 broadband customers, and its AMSE operation, which manages AOL France's customer service operations (500 people). AOL will provide audience services and manage the online advertising sales for Neuf Cegetel's Internet portal audience on www.neufportail.fr and www.cegetelportail.fr as well as www.aol.fr. Together this will total 9 million unique visitors monthly, and is in-line with Time Warner's goal of exiting the access business and keeping the content side of the business.

This also helps Neuf Cegetel accelerate its operations, which may help its proposed IPO terms next month. AOL's 500,000 broadband customers should allow Neuf Cegetel to reach 2 million ADSL subscribers before the end of 2006, a year earlier than planned. And, by encouraging AOL's dial-up customers to migrate to broadband access, Neuf Cegetel expects to accelerate the growth of its market share.

Neuf Cegetel has made a commitment to hire up to 140 AOL France employees, who will fill open positions within its group. At the end of 2006, all of AOL's broadband customers will benefit from innovative services offered by Neuf Cegetel, such as Neuf TV DSL TV, mobile telephony and TWIN, among others. This should enable Neuf Cegetel to grow its revenue per subscriber progressively, as well as increase customer loyalty. Neuf Cegetel will also make attractive offers to AOL France's dial-up customers to migrate to the group's broadband offers, which are among the most attractive and innovative on the market.

Reporting on foreign IPO's and the basic IPO terms can be a bit arduous, but not when it involves a US company. That is particularly true if it involves an AOL unit sale. Today's IPO details from Neuf Cegetel could have very positive implications for Time Warner.

Neuf Cegetel, a French phone operator that is the second largest fixed-line operator in that country after France Telecom, offered further details of its IPO overseas today in a filing with the French Financial Markets Authority. It plans to sell shares by the end of October. Neuf Cegetel is the combined operations of recently merged Neuf Telecom and Cegetel. The company now plans to raise up to 1 Billion Euros (said to be 500 million to 1 billion), which is about $1.28 Billion dollars US if it is at the high-end of the range. This will be roughly 20% of the stock to be sold in October, so you can imply what will roughly be a $6.4 Billion US-equivalent market cap. It appears as though about one-third of the shares in the offering will be new shares from the company and the rest will be from existing holders, but this will essentially be enough funds raised by the company to be able to live up to the 300 million to 350 million Euro price tag that Neuf Cegetel is planning to pay for AOL France. Last month the company announced exclusive negotiations to purchase AOL France from Time Warner (TWX).

The combined Neuf Cegetel also said earnings came in at a combined 107 million Euros for the first half of 2006, compared to a loss for the same quarter last year. With the raw organic earnings and the proposed shares sale they should now easily be able to cover this acquisition price. Interestingly enough, Vivendi and Louis Dreyfus each hold a 35% stake on a pre-IPO basis of Neuf Cegetel.

On the surface, 300 million or even 350 million Euros ($448 million dollars US on the high side) is not really a big deal on a static basis. Fortunately for Time Warner (TWX) we do not live in a vacuum and the world isn't static. This sets the stage for the other units in AOL Europe, AOL Germany and AOL UK, to have more specific valuation references. Just recently there have been discrepancies over a price and even over an exact buyer about the AOL German operations. There has been roughly the same scenario in the UK. If Time Warner can get this deal closed in France, it may be able to clean up its involvement there and get on the road to focusing on US-based profitable operations. The company already telegraphed the EU jobs would be among the coming casualties as far as their obligation on the books, so a lot of this is thinking beyond an "if, then" scenario.

We will follow up with another story after the other details are more clear. Unfortunately this is a story full of moving parts and the scenarios could come in many forms.