January 07, 2009, 1:49 PM — Time Warner has revised its financial forecast and now expects to close the 2008 fiscal year with a net loss, due to a forthcoming multi-billion dollar asset write-down partly involving its struggling AOL Internet unit.
Time Warner, which will announce its fourth-quarter and full-year financial report on Feb. 4, said Wednesday it will post a net loss for 2008. Its previous outlook, announced on Nov. 5, called for the company to earn between $1.04 and $1.07 per share in 2008.
The estimated $25 billion non-cash impairment charge is the result of an ongoing review of the valuation of Time Warner's cable, publishing and AOL units, the company said.
Time Warner, which recorded operating income of $8.9 billion in 2007, now also expects to post an operating loss in 2008.
Another metric that the company downgraded expectations for on Wednesday was adjusted operating income before depreciation and amortization, which Time Warner expected to see grow about 5 percent in 2008. It now expects it grow only 1 percent due to some one-time charges as well as to disappointing online ad revenue from AOL.
AOL, whose business model Time Warner transformed from being subscription-based to being advertising-based, has lagged its rivals and the market average in online ad revenue growth in the past year.
There have been consistent rumors that Time Warner is eager to divest itself of AOL. Yahoo, which has a host of problems of its own, has been mentioned as a possible buyer.