AOL reported a fourth quarter net loss of $44.9 billion, or $10.04 a share, after taking the non-cash charge to write down the value of its embattled America Online business and other assets, compared to a year-ago loss of $1.8 billion, or 41 cents a share.

The company, which in the first quarter had reported a net loss of $54 billion after writing down the value of assets, posted a full-year 2002 net loss of $98.7 billion.

Strength in the company's film/entertainment business, with hits like the "Lord of the Rings" sequel, and cable networks offset weakness in the fourth quarter at America Online, which has been suffering from a sharp slowdown in advertising spending and subscriber growth.

The quarter capped a tumultuous year. About two years after AOL completed its $106.2 billion purchase of Time Warner, the old media veterans from Time Warner are running the show and the key architects of the deal have been forced out amid calls from angry investors that view the merger as a failure.

AOL Time Warner said its revenue in the quarter grew 8 percent to $11.4 billion.

Earnings before interest, taxes, depreciation and amortization (EBITDA) -- a key measure of cash flow --- rose 16 percent to $2.8 billion from a year-earlier for the quarter.

The company said it sees revenue growth for the 2003 full year in the mid-single digits and said it sees EDITDA to be essentially unchanged to down in the low-single digits.

Earlier on Wednesday, AOL Time Warner said it sold its 8.4 percent stake in Hughes Electronics Corp. as part of its efforts to cut its debt load.

The company said it plans to reduce total consolidated debt to approximately $20 billion by the end of 2004.

Shares of AOL closed up 30 cents, or 2.2 percent, at $13.96 on the New York Stock Exchange ahead of the results.

Updated article:

AOL TW Posts Loss of Nearly $100 Billion

Wed January 29, 2003 05:17 PM ET

By Reshma Kapadia

NEW YORK (Reuters) - AOL Time Warner Inc. AOL.N , the world's largest media company, on Wednesday posted a 2002 loss of nearly $100 billion, the largest annual loss in U.S. corporate history, after taking a whopping $45.5 billion charge in the fourth quarter to write down the value of assets.

The company, which also said media mogul Ted Turner would step down as vice chairman, reported a fourth quarter net loss of $44.9 billion, or $10.04 a share, after taking the non-cash charge to write down the value of its embattled America Online business and other assets. That compared to a year-ago loss of $1.8 billion, or 41 cents a share.

While analysts said overall operating numbers came in near expectations, some expressed disappointment at the size of the charge -- which came on top of a $54 billion charge AOL took in the first quarter.

"The negative was the goodwill writedown of $45 billion, which was bigger than expected, although their debt covenants are still safe because they have to keep at least $50 billion in equity and they finished the year with about $52 billion," said David Joyce, an analyst at Guzman & Co.

Shares of AOL fell to $13 in after-hours trade, after closing at $13.96 in regular New York Stock Exchange trade.

AOL Time Warner posted earnings before a range of items of 28 cents a share, compared to 26 cents a year-ago. This compared to analysts' consensus estimates of 26 cents a share, according to Thomson/First Call.

The company said revenue in the quarter grew 8 percent to $11.4 billion while earnings before interest, taxes, depreciation and amortization (EBITDA) -- a key measure of cash flow --- rose 16 percent to $2.8 billion from a year-earlier for the quarter. Analysts polled by Multex expected, on average, EBITDA of $2.6 billion.

The company said it sees revenue growth for the 2003 full year in the mid-single digits and said it sees EDITDA to be essentially unchanged to down in the low-single digits.

Earlier on Wednesday, AOL Time Warner said it sold its 8.4 percent stake in Hughes Electronics Corp. GMH.N as part of its efforts to cut its debt load.

The company said it plans to reduce total consolidated debt to approximately $20 billion by the end of 2004.

Turner, AOL's largest individual shareholder and the originator of 24-hour news network CNN who is often called "the mouth from the South," will step down as vice chairman at AOL's annual meeting in May, Chief Executive Richard Parsons told analysts on a conference call.

Turner, in notifying Parsons of his resignation, said he wanted to devote more time to his philanthropic and other interests.

Turner had told cable television executives in November 2001 that he felt sidelined by AOL Time Warner when he was replaced in January 2001 as head of Turner Broadcasting Systems, the unit that includes CNN.

Turner as of the end of July held about 122 million AOL shares.

Dang, i wonder if they can afford their fancy new digs in NYC after this...

New York Daily News - http://www.nydailynews.com
AOL Time Warner Columbus Circle future uncertain
By ERIC HERMAN
DAILY NEWS BUSINESS WRITER
Sunday, July 21st, 2002

The future is coming to Columbus Circle.
But for AOL Time Warner, the future is far from certain.

As the steel frames rise on the 2.1 million-square-foot AOL Time Warner Center, some in the real estate industry believe troubles at AOL are already altering the company's plans.

"Whatever [space] they were planning on using, they're going to be using a significant amount less," said a real estate source.

Indeed, several real estate executives told the Daily News the company already has plans to sublease some of its space in the new building.

AOL, for its part, says it intends to go forward with the plan to move into its new home.

"We're committed to building our headquarters at AOL Time Warner Center," an AOL spokesman said. "We have no plans to sublease any of our space."

Alternatively, it could sell its interest. But one thing it can't do is bail out of the project.

That could present a problem for AOL, which is obligated to buy 860,000 square feet of office and studio space when the building is complete. Estimates of the purchase price range from $350 million to $450 million.

The building is set for completion in late 2003 or early 2004.

"They can't back out," said Bruce Warwick, one of the project's developers. "They need the space, and they fully intend to go forward."

In November 2000, a team of developers led by the Related Companies broke ground for an ambitious, twin-towered building that includes offices and studios for AOL Time Warner, 191 luxury condominiums, a hotel, shopping, and a facility for Jazz at Lincoln Center.

The residences sell for $1.6 million to $32.5 million. About 80 of the condos have sold. Buyers include singer Ricky Martin and producer Arnold Kopelson.

Related bought the land for an estimated $345 million from the MTA after the agency's deal with Boston Properties fell through. (Boston Properties chairman Mortimer B. Zuckerman also is chairman and co-publisher of the Daily News.) For financial backing, Related partnered with William Mack's Apollo Real Estate Advisors.

Related's commitment from Time Warner - secured before the merger with AOL - helped it beat out other developers bidding for the land. Later, AOL contributed to a $400 million fund to pay for construction. Related went to GMAC for a $1.3 billion construction loan, the largest ever, to pay for the rest.

Having a top media company as a partner in the project seemed like a safe bet back in the '90s. But times have changed. Management turmoil and a plunging stock price have clouded the company's future.

Even so, many brokers predict AOL will occupy the building. Since AOL is purchasing its space as a condominium, Related is guaranteed to get its money, they say.

But Related already is trying to lease 318,000 square feet of additional office space it owns as landlord, according to CoStar Group. In a market already glutted with sublease space, that could pose a problem.

"If AOL takes all their space and subleases it, then it's obviously a competition for them," said Barry Gosin, chief executive of Newmark & Company, a real estate firm.

...............................................
http://www.newyorkmetro.com/nymetro/realestate/urbandev/features/6287/
AOL's Faulty Towers
Can the city's other twin towers stand as anything but a memorial to the worst corporate marriage in history?

By Simon Dumenco
(Photo credit: Kenneth Chen)

Your marriage is a wreck, you hate each other, everybody thinks you should get divorced, and yet you're still building a lavish new home together.

That, of course, is AOL Time Warner's predicament. As the company's stock has nosedived, its glittering new headquarters -- the 80-story Columbus Circle behemoth slated for completion in fall 2003 -- has just kept on rising, an insta-symbol not of corporate triumph but of astonishing hubris: A lowbrow Internet company from an airport town (Dulles, Virginia) set out to build itself spectacular offices that would tower over a circle dedicated to the discoverer of the New World. The discoverers of the New Media World -- or so they thought -- were taking Manhattan!

Curiously, though, AOL Time Warner Center won't serve as a true corporate home -- only about 2 percent (around 2,000) of its 90,000-plus employees will work there; it's mostly a gleaming clubhouse for corporate apparatchiks. The bulk of AOL's operations will remain in Dulles.

As for the Time Warner operations, it's as if the betrothed -- skittish before the wedding, hysterically miserable after -- had wisely elected to keep her own apartment. "We were never supposed to move in," says one Time Inc. executive who works at the magazine division's stately, modernist headquarters at 1271 Sixth Avenue. "It'd make sense for us to consolidate. There's not enough room here. But Columbus Circle is about them -- the AOL assholes -- not us."

"The collective response to the new building," says another employee, "is similar to how people are thinking about their 401(k)s: I can't even look because I don't want to know."

Even the supposed star power of the center's 191 condos has some employees down in the mouth. "All you ever hear about is how Ricky Martin bought an apartment," says one. "Remember when he was hot? AOL used to be hot, too."

Worse than the center's inability to attract a celebrity with a current hit single (maybe Enrique Iglesias could get a discount on a duplex?) is the fact that it will be eerily defined by its key attribute. Nan Ellin, editor of the book Architecture of Fear, refers, unnervingly, to the center's "twin towers" and points out that "people around the world will be reminded of the World Trade Center." The connotation could go either way -- it could be spooky and upsetting, or "it could almost seem like a tribute."

But one thing's certain: "The way that people end up perceiving the center," says Ellin, "cannot be separated from the way they perceive the corporate marriage. If the marriage falls apart, people will think of that first."

In other words, the AOL Time Warner Center could come off as the first major memorial to premillennial new-media ridiculousness, a monument to overreaching, overpromising, and overstating (earnings).

It's vaguely reminiscent of what happened to another building from Time Inc.'s not-so-distant past. In the late eighties, Time Inc. spent $185 million to buy half of the then-burgeoning Knoxville-based media empire Whittle Communications. Part of the money went toward building a lavish Knoxville headquarters.

Within just a few years, Whittle went belly-up.

Those with little faith in AOL TW's future might be interested to know that the Whittle HQ is now a federal courthouse, where white-collar criminals and other scofflaws get their comeuppance.

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