AOL Time Warner lost a massive $54.2 billion in the first quarter of 2002 due to the declining value of some of its assets. The loss is the biggest in US corporate history. The company attributed this to an accounting charge of $54 billion, factored in to reflect a decline in value of some assets acquired with Time Warner.
Advertising sales for the media giant continue to be slow – AOL subscribers and cable connections grew, however.
Revenue for the quarter, which ended March 31, increased 4 per cent year-on-year to $9.8 billion.
Earnings reached $2.05 billion – a three per cent jump over the $1.98 billion reported in the same quarter of 2001.
“There is a lot of good news, but one area of real disappointment – weak advertising sales,” said Dick Parsons, CEO-elect at AOL Time Warner. Advertising revenue lagged, and is not expected to increase until next year, said Parsons.
Box-office gains help offset loss The company reduced its full-year guidance, predicting growth in the range of 5 per cent to 9 per cent. Previous forecasts put growth in the range of 8 per cent to 12 per cent, Parsons remarked.
“We are assuming no recovery in the economy,” he said.
Subscription revenue surged 14 per cent to $4.7 billion over the same quarter last year, the company said. These gains came because of subscriber growth in both the AOL and cable businesses. The company also received a boost from its blockbuster films Harry Potter and the Philosopher’s Stone and Lord Of The Rings: The Fellowship of the Ring (the latter rendered entirely on Macs) which are among the highest-grossing movies of all time.
The AOL unit’s earnings, however, declined 15 per cent year-on-year – though subscriptions rose, the business suffered from a 31 per cent drop in advertising and commerce-revenue.