AOL Time Warner reported profitable second-quarter results yesterday, but confirmed it's under investigation by the US Security and Exchange Commission (SEC).

The news broke after trading closed yesterday – against a background of a stock market rally that raised the Dow Jones Index by its biggest one-day gain for fifteen years. It's not known if these symptoms of another potential corporate accountancy scandal will depress yesterday's gains.

AOL Time Warner's film and cable businesses made up for continued weakness in the America Online (AOL) Internet unit. The results beat expectations, but the Internet and media giant warned of a weak third quarter ahead.

Enquiry The SEC is conducting a fact-finding inquiry into the way in which the AOL unit has booked past revenue. News of the probe comes days after media reports were released claiming AOLTW had performed a series of unusual transactions to prop up its revenues.

Net income for the second quarter of 2002 was $394 million, compared to a net loss of $734 million in the same quarter of 2001. Revenue for the quarter, which ended June 30, came in at $10.6 billion, a 10 per cent increase over the $9.6 billion the company reported for the second quarter last year.

Earnings before charges were $2.5 billion, up two per cent from $2.4 billion in the second quarter of last year. The company's film and cable businesses experienced revenue increases of 26 per cent and 18 per cent, respectively, over the same period last year.

However, these were offset by AOL's weak results. The Internet unit reported a 3 per cent decline in revenue for the quarter. The weak online-advertising market limited revenue growth.