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AOL warns on 2001
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September 24, 2001: 7:30 p.m. ET
AOL Time Warner expects cash EPS to be below previous expectations
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NEW YORK (CNNfn) - Media conglomerate AOL Time Warner said Monday its cash earnings per share this year will be lower that previous expectations, due to the Sept. 11 terrorist attacks and the advertising market slowdown.
AOL (AOL: Research, Estimates), the parent of CNNfn, said 2001 earnings growth before interest, taxation, depreciation and amortization (EBITDA) will now be about 20 percent, with revenue rising 5-to-7 percent.
Until now, AOL Time Warner had stuck by its projections for 2001 EBITDA growth of 31 percent, or $11 billion, and had said that it would grow revenue by as much as 10.5 percent, to $40 billion.
Analysts surveyed by First Call were expecting the company to earn $1.27 per share for the full year, with 30 cents per share coming in the third quarter and 42 cents per share in the fourth quarter.
The company said before the attacks it saw no improvement on the overall advertising environment, and events at the World Trade Center and the Pentagon compounded the ad slowdown.
AOL said its 2001 results were affected primarily by advertising softness and the commitment of additional resources to its newsgathering operations, which include CNN.
But AOL said that, despite current uncertainty, it still sees double-digit growth for 2001 EBITDA.
"The bottom line is – despite this tragedy and the resulting economic affects – our unique mix of assets give us confidence that we can generate strong earnings growth next year and into the future," said Steve Case, AOL Time Warner chairman, in a statement.
"What we are not seeing is a clear indication for the 2002 revenue numbers and that will continue to be somewhat of a question mark," said Youssef Squali, analyst at FAC/Equities.
Many analysts still maintained that AOL Time Warner was attractive at current levels and said its subscriptions business provided it with a bit more insulation than some of its peers.
"Certainly some of the luster has come off, but 20 percent growth is nothing to sneeze at," said Phil Leigh, analyst at Raymond James.
Shares of AOL fell $1 to $31.50 in after-hours trading. 
-- from staff and wire reports
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AOL Time Warner
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