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Turner quits as AOL loss hits $99B
Thu Jan 30, 7:24 AM ET Add Top Stories - USA TODAY to My Yahoo!
David Lieberman USA TODAY
NEW YORK -- AOL Time Warner rocked Wall Street on Wednesday as it reported a $99 billion loss for 2002 -- the largest annual loss ever by a U.S. company -- and said Ted Turner is resigning as vice chairman.
The announcements cap a tumultuous year for the world's largest media company and might be seen as the final pen stroke on the Internet go-go years.
Though most of the loss is on paper, it indicates a breathtaking collapse in the value of what was considered a fearsome powerhouse in 2001 when America Online bought Time Warner for $106 billion.
No immediate effect on consumers is anticipated. But America Online will continue plans to court more broadband customers and to give AOL subscribers access to exclusive content from other Time Warner properties, for a fee.
During the Internet boom, America Online was valued at more than $200 billion. Now it is on the books for $7.8 billion. That computation comes after the company's surprising announcement that it shaved $45.5 billion off the value of its assets in the last quarter of 2002 -- most of that due to the diminished worth of America Online, where ad sales have plummeted and subscription growth has slowed.
Earlier in the year, the company slashed the value of other non-Internet assets by $54 billion.
Since the write-downs are only on paper, to reflect the falling asset values in the stock market, they resulted in a reported loss but ''do not affect our liquidity'' and don't run afoul of bank loan agreements, Chief Financial Officer Wayne Pace said. The company generated $41.1 billion in revenue last year, up 7%.
The company isn't promising 2003 will show much, if any, improvement: CEO Richard Parsons said it ''will be a challenging year.'' With declines in store for the Internet service, slow ad sales at its cable systems, and ongoing problems in music, revenue will rise less than 10%; cash flow growth will be virtually flat.
''That's worse than I anticipated, and I thought I was pretty dour,'' says Tom Wolzien, an analyst at Sanford C. Bernstein. ''It's hard to believe.''
The announcements came after markets closed. AOL shares dropped 10% in after-hours trading.
Analysts also were stunned by Turner's plan to step aside as vice chairman after the shareholders' meeting in May. One of AOL's largest investors, Turner, 64, did not say whether he will also give up his board seat. That will be settled soon, an AOL spokeswoman said, although Parsons believes Turner will stay.
Turner was not available for comment. He said in a statement that he ''would like to now devote even more time, effort and resources'' to his businesses and charities. Among other things, he is helping to finance documentaries and is opening a bison and burger restaurant chain, Ted's Montana Grill.
But Turner is clearly frustrated with his current role at AOL. He told 60 Minutes II, in an interview to be broadcast next week, that he has ''a title without portfolio, like the emperor of Japan.''
He took over his father's Turner Broadcasting in 1963 and ran it until 1996, when he sold to Time Warner. In that time, he was the nation's leading cable entrepreneur. He launched CNN, TBS and TNT, bought the Castle Rock and New Line film studios and bought film libraries from MGM and Hanna-Barbera.
Lately, though, ''Ted's made it clear that he doesn't want to work full time,'' Blaylock & Partners analyst John Tinker said. ''And at a company like AOL Time Warner, either you're involved or you're not.''
Turner quits as AOL loss hits $99B
Thu Jan 30, 7:24 AM ET Add Top Stories - USA TODAY to My Yahoo!
David Lieberman USA TODAY
NEW YORK -- AOL Time Warner rocked Wall Street on Wednesday as it reported a $99 billion loss for 2002 -- the largest annual loss ever by a U.S. company -- and said Ted Turner is resigning as vice chairman.
The announcements cap a tumultuous year for the world's largest media company and might be seen as the final pen stroke on the Internet go-go years.
Though most of the loss is on paper, it indicates a breathtaking collapse in the value of what was considered a fearsome powerhouse in 2001 when America Online bought Time Warner for $106 billion.
No immediate effect on consumers is anticipated. But America Online will continue plans to court more broadband customers and to give AOL subscribers access to exclusive content from other Time Warner properties, for a fee.
During the Internet boom, America Online was valued at more than $200 billion. Now it is on the books for $7.8 billion. That computation comes after the company's surprising announcement that it shaved $45.5 billion off the value of its assets in the last quarter of 2002 -- most of that due to the diminished worth of America Online, where ad sales have plummeted and subscription growth has slowed.
Earlier in the year, the company slashed the value of other non-Internet assets by $54 billion.
Since the write-downs are only on paper, to reflect the falling asset values in the stock market, they resulted in a reported loss but ''do not affect our liquidity'' and don't run afoul of bank loan agreements, Chief Financial Officer Wayne Pace said. The company generated $41.1 billion in revenue last year, up 7%.
The company isn't promising 2003 will show much, if any, improvement: CEO Richard Parsons said it ''will be a challenging year.'' With declines in store for the Internet service, slow ad sales at its cable systems, and ongoing problems in music, revenue will rise less than 10%; cash flow growth will be virtually flat.
''That's worse than I anticipated, and I thought I was pretty dour,'' says Tom Wolzien, an analyst at Sanford C. Bernstein. ''It's hard to believe.''
The announcements came after markets closed. AOL shares dropped 10% in after-hours trading.
Analysts also were stunned by Turner's plan to step aside as vice chairman after the shareholders' meeting in May. One of AOL's largest investors, Turner, 64, did not say whether he will also give up his board seat. That will be settled soon, an AOL spokeswoman said, although Parsons believes Turner will stay.
Turner was not available for comment. He said in a statement that he ''would like to now devote even more time, effort and resources'' to his businesses and charities. Among other things, he is helping to finance documentaries and is opening a bison and burger restaurant chain, Ted's Montana Grill.
But Turner is clearly frustrated with his current role at AOL. He told 60 Minutes II, in an interview to be broadcast next week, that he has ''a title without portfolio, like the emperor of Japan.''
He took over his father's Turner Broadcasting in 1963 and ran it until 1996, when he sold to Time Warner. In that time, he was the nation's leading cable entrepreneur. He launched CNN, TBS and TNT, bought the Castle Rock and New Line film studios and bought film libraries from MGM and Hanna-Barbera.
Lately, though, ''Ted's made it clear that he doesn't want to work full time,'' Blaylock & Partners analyst John Tinker said. ''And at a company like AOL Time Warner, either you're involved or you're not.''
