AOLTW reports Q2 profit despite AOL drag

AOL Time Warner Inc. (AOLTW) reported a profit for its second-quarter results Wednesday, as the company's film and cable businesses made up for a continued weakness in the America Online (AOL) Internet unit.

Net income was US$394 million, or $0.09 a share, compared to a net loss of $734 million, or $0.17 a share in the same quarter of 2001.

Revenue for the quarter, which ended June 30, came in at US$10.6 billion, a 10 percent increase over the $9.6 billion the company reported for the second quarter of last year.

Earnings before interest, taxes, depreciation and amortization (EBITDA) were $2.5 billion, up two percent from $2.4 billion in the second quarter of last year, with cash earnings per share of $0.24, exceeding consensus expectations of $0.22 per share from analysts surveyed by Thomson Financial/First Call.

The on-target results come after a tumultuous week for AOLTW, which saw an executive shakeup and a realignment of the company's business structure.

The company announced last Thursday that AOLTW Chief Operating Officer and interim AOL head Robert Pittman was resigning. The company's troubled Internet division will now fall under the control of veteran Time Warner executive Don Logan. Logan's ascension, along with that of fellow Time Warner holdover Jeff Bewkes, which was also announced last week, are being seen as a power shift in the old media company's favor. Bewkes, who was formally chairman and CEO of HBO, will take charge of the company's new Entertainment & Networks Group.

Investors have watched AOL struggle in recent months to sustain growth, while reports last week that AOLTW engaged in unusual transactions to boost the unit's revenues rang investor alarms. The Washington Post reported Thursday of last week that the company had shifted revenue from one division to another to prop up AOL's earnings, amid other alleged financial shenanigans. Although AOLTW has said that all the transactions in question were perfectly legal, a cloud of doubt still plagues the company. Its stock price, which has already declined 60 percent so far this year, has taken a further hit in recent days. This comes as bad news for new AOLTW Chief Executive Officer (CEO) Richard Parsons, who took the helm in May pledging to regain investor confidence by cleaning up the AOL division and ensuring financial transparency. Shares of AOLTW (AOL) closed down 1.3 percent to $11.40 before the results were released.

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