AOL Time Warner reports biggest loss in U.S. history
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Posted 5:49PM on Wednesday, April 24, 2002
UNDATED - AOL Time Warner Inc., the world's largest media company, reported a net loss of $54.24 billion for its first quarter on Wednesday, the largest quarterly loss for a U.S. company, due to a massive balance sheet writedown mandated by new accounting rules. <br>
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The writedown, which was previously disclosed, exceeded the previous largest quarterly loss of $41.8 billion, which the former telecom high-flier JDS Uniphase reported in its first quarter of 2001. <br>
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AOL Time Warner's loss was entirely due to a writedown because of a sharp decline in the company's stock, which has fallen by more than half since the merger of America Online and Time Warner was announced in January of 2000. In the same period a year ago, AOL Time Warner had a net loss of $1.4 billion. <br>
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Under the new accounting rules, goodwill the premium paid for an acquisition above the value of the tangible assets acquired can no longer be written off gradually over a period of up to 40 years. Instead, companies must constantly weigh the value of their investment in the acquired company and write off any reduction in value as it occurs. <br>
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Without the effect of the accounting change and other one-time effects, AOL Time Warner's results beat analyst expectations. Earnings per share rose to 18 cents a share, compared with 16 cents per share in the same period a year ago and above the 14 cents per share that analysts polled by Thomson Financial/First Call had been expecting. <br>
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The results were announced after the close of regular stock trading on the New York Stock Exchange. During Wednesday trading, AOL shares rose 19 cents to close at $19.30 each. They fell in after-hours trading. <br>
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Revenues rose 7 percent to $9.76 billion compared with $9.12 billion in the same period a year ago. Revenues would have risen 4 percent if the acquisitions of AOL Europe and IPC Media, a British magazine company, had been included in both periods. That revenue growth also came in well above analysts' estimates of $9.44 billion.
