Time Warner (TWX) confirms that it will spin off the rest of its cable business after a disappointing Q in which profits fell 36% to $0.22, a penny below consensus. The company did reaffirm its full-year outlook, however.
Revenues up 2.1% to $11.4 billion. The profit miss is attributed to AOL, where cost cutting measures have failed to stem tanking profits. AOL’s ad revenue was in line with guidance, but an ongoing revenue mix shift hit EBITDA. Time Warner’s publishing and TV Networks divisions both increased profits. Bloomberg:
Time Warner shares, down 34 per cent from a 2007 high, rose 16 cents to $15.27 yesterday in New York Stock Exchange composite trading.
“If you separate out cable, the content business is cheap,” said Paul Greene, media analyst at T. Rowe Price Associates Inc. in Baltimore, which owns more than 59 million Time Warner shares among its $400 billion in assets. “If they get cash from cable and use that to buy back shares of the parent company, that’s very accretive.”
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