RUMOR MILL
Tuesday, September 25, 2001
AOLTW EXPECTS SLOWER GROWTH
In Light of Terror Attacks, Company Adjusts Its Revenue Expectations
After the close of regular trading on Monday (9/24), AOL Time Warner warned that it now expects slower growth in earnings and revenue this year because of a slump in advertising, which was worsened by the Sept. 11 terrorist attacks, the Los Angeles Times reports.
The announcement sent the company's shares, which had closed up $2.65 at $32.50, down to $31.13 on the New York Stock Exchange.
Previously AOLTW had estimated its growth in the neighborhood of 12-15%. Now, the company is expecting full-year revenue to grow by only 5-7%. It also expects earnings before interest, taxes, depreciation and amortization—the ever-popular EBITDA—to grow about 20%, down 10% from previous estimates.
The announcement sent the company's shares, which had closed up $2.65 at $32.50, down to $31.13 on the New York Stock Exchange.
Previously AOLTW had estimated its growth in the neighborhood of 12-15%. Now, the company is expecting full-year revenue to grow by only 5-7%. It also expects earnings before interest, taxes, depreciation and amortization—the ever-popular EBITDA—to grow about 20%, down 10% from previous estimates.
Numerous other media companies, including Viacom and Walt Disney Co., have also warned of slower earnings following the attacks.
At the same time that advertising is falling, the Times reports, AOLTW's expenses for covering the ongoing story are rising at the company's news-driven operations including CNN and Time magazine.
Even before the attacks, analysts had questioned AOLTW's ability to meet the aggressive growth targets it had set for itself, especially amid economic uncertainty. The recent attacks only exacerbated the already weak ad picture.
