AOL TIME WARNER, AMAZON HEADING IN THE RIGHT DIRECTION

The media conglom reported second-quarter net income of $1.06 billion (or 12 cents a share), compared to $396 million (or 9 cents a share) in Q2 2002. Revenue rose 6% to $10.8 billion, beating most analysts’ forecasts, though not by much.

At America Online, the albatross around the media giant’s neck for the last three years, the situation remained problematic, as operating income fell 23% and revenue dropped 6% due to declines in advertising and other revenue—this despite increased revenue from subscriptions.

AOLTW’s debt load remains a staggering $24 billion, but the conglom vows to cut the deficit to $20 billion by the end of 2004 and says operating income before depreciation and amortization will increase in the single digit level through the rest of this year.

Buoyed by analysts’ increasingly optimistic assessments, AOLTW stock is up nearly 30% on the year and about 46% since July 2002. But shares have dropped following the earnings report, adversely affected by a disputed finding by the Securities and Exchange Commission's that the company incorrectly accounted for a pair of deals with Bertelsmann.

Investors are showing a far more positive attitude toward Amazon.com, after the Web retailer reported a $43 million loss (or 11 cents a share) in Q2, compared to the $93.6 million loss it posted a year ago.

The news sent Amazon shares rocketing upward; in fact, the stock was up more than $4 (nearly 12%) since the opening bell, and nearing $39 a share.

The tech pioneer earned $42 million, or 10 cents per share, far exceeding forecasts of 6 cents per share. Revenue was up 37% to $1.1 billion, compared $806 million a year ago. Amazon ended the quarter on a roll, thanks to the publication of Harry Potter and the Order of the Phoenix, racking up worldwide sales just south of 1.5 million copies.

The company predicts full-year sales in the $5 billion range, which would be a 25-30% increase from 2002.