AOL Time Warner revenue figures slip

Declining ad sales and added costs related to the 11 September terrorist attacks on the US continue to erode the earnings of...

Declining ad sales and added costs related to the 11 September terrorist attacks on the US continue to erode the earnings of Internet and media giant AOL Time Warner, which on 24 September revised its financial estimates downwards.

AOL Time Warner said it now expects to see its adjusted earnings for 2001 grow by only 20% compared to the previous year.

Revenue growth also will slump to between about 5% and 7% over 2000, the company said in a statement. Earnings-per-share are also set to be lower than expectations of between $1.28 (£0.87) and $1.32 (£0.90), though the company did not offer exact figures.

AOL Time Warner (AOL) shares gained 8.88%, to close at $32.50 (£22.24) on 24 September, ahead of the company's statement. In after-hours trading about one hour past market close, its shares fell $1 to $31.50 (£21.50).

The company said cash flow figures would remain in line with earlier estimates, growing at least 200% in 2001 over the previous year. Revenue from its content business and from AOL subscriptions is not expected to be affected by the 11 September tragedy. Those divisions account for about 75% of AOL Time Warner's total annual revenue.

But the additional resources the company gave to aid many of its news and media units covering the devastating terrorist attacks added more financial burden.

AOL Time Warner said a substantial amount of additional financing was given to its newsgathering operations, including CNN, Time, AOL and the New York cable news channel NY1, to cover the events. Although those business units drained cash from the company, AOL Time Warner's chief executive officer, Gerald M. Levin, said that the company would continue funding those efforts "whatever the circumstances and with whatever resources are necessary".

The declining market for advertising will have the hardest impact on the company's financial results. This has already become apparent as the company said last month it would cut staff from its America Online and iPlanet divisions.

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