Media conglomerate Time Warner Inc said on Wednesday quarterly profit rose 34 percent, boosted by AOL asset sales in Europe, a rise in digital cable and phone customers, and online advertising sales. The company, which until now has not provided annual earnings-per-share forecasts, gave what some analysts called a conservative outlook for 2007.
Time Warner said 2007 profit could reach about $1 per share, including an expected 10-cent gain from the sale of some AOL properties. Analysts on average expect profit of $1.01 per share for the year, according to Reuters Estimates. It was not immediately clear if their calculations included gains from AOL sales.
Time Warner also said it had established a $600 million legal reserve to deal with pending securities lawsuits. Revenue and profit growth at the company's cable services and cable networks division offset declines at the Warner Bros. movie studio and AOL Internet division, which is undergoing a major business model overhaul.
The owner of the HBO pay-cable network said net income rose to $1.75 billion, or 44 cents per share, from $1.3 billion, or 28 cents per share, a year earlier. Excluding special items such as a $769 million gain on the sale of AOL's Internet access businesses in the United Kingdom and France, the company said earnings per share was 22 cents. Revenue increased 8 percent to $12.5 billion, narrowly beating Wall Street expectations of $12.35 billion.
Results benefited from an increase in broadband service and digital phone subscribers, sending cable division revenue up 58 percent to $3.7 billion. Operating profit for the division rose 46 percent excluding items in the quarter. AOL revenue fell 8 percent to $1.9 billion, dragged by restructuring charges and loss of dial-up Internet subscribers. Operating income fell 10 percent.
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