Time Warner Writes Down $25B
January 8, 2009 at 5:22 AM (PT)
TIME WARNER hit the bad news trifecta YESTERDAY (1/7), as the company announced a $25 billion writedown on the value of some assets and further reductions in advertising revenue at AOL and TIME INC. that combined will result in a full-year net loss, reports THE NEW YORK POST. TIME WARNER shares closed trading yesterday down 69 cents, or 6.3%, to $10.29. Only two months ago, TIME WARNER forecast a full-year profit of as much as $1.07 per share, but indicative of the swiftness of the global economic collapse, the company now expects to record an unspecified loss for 2008.
Declines in the value of its cable, publishing and AOL units led to the $25 billion writedown, with $15 billion of that coming from cable alone.
In 2002, TIME WARNER took a $100 billion writedown to reflect its AOL merger
Moreover, while TIME WARNER is the first to get slapped with a massive writedown, it certainly won't be the last as analysts anticipate that the surprise hits that plagued banks during the second half of 2008 will spread to media companies and the rest of corporate America.
Indeed, analysts were less concerned about the writedown than they were about the deteriorating advertising trends at TIME INC. and AOL.
"The advertising outlook at AOL and TIME [INC.] is more grim than previously thought," said BARCLAYS analyst ANTHONY DICLEMENTE.