AOL Time Warner set to suffer multibillion dollar hit


AOL Time Warner set to suffer multibillion dollar hit

When AOL Time Warner (AOLTW) releases its 2002 annual results later this month, the media mammoth is expected to take another multibillion dollar charge related to the eroding value of its AOL Internet unit.

Analysts expect the company to take a goodwill write-down of anywhere from $10bn (£6bn) to $30bn (£18bn), and last October AOLTW warned that another write-down was probably on the way.

The charge, which is expected to be announced with the full-year results on 29 January, follows a $54bn (£34bn) charge the company took last year. "Goodwill" represents the difference between what a company pays for another company's assets and what they are estimated to be worth, in this case referring to the 2001 merger of AOL and Time Warner.

Even though the charge itself may not be a surprise, the sheer magnitude of the anticipated write-down and AOL's sluggish performance of late have sent some AOL watchers tittering.

While an AOLTW spokeswoman declined to comment on the size of the upcoming charge, she stressed that it would not affect the company's cash flow.

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