Time Warner (TWX) announced that its first-quarter profits exploded to 59 percent, primarily because of its cable television and from selling it book division. The down side is that AOL continues to struggle and the film side of the business is very weak.
During the quarter Time Warner sold businesses and committed to the goal of cutting $1 billion in costs. The cuts helped to raise the profits for the quarter, but revenue hasn't grown with AOL still losing customers at a quick pace and the box office still being slow for them. The company is having problems creating growth across all of its product lines.
In the quarter ending in March, profits grew to $1.46 billion, or 32 cents a share, up from $915 million from last year. Sales were up 1 percent to $10.46 billion.
Even after taking out the profits from the sale of the book division, they were still way ahead of the 20 cents a share that analysts predicted they were looking for.With Time Warner changing the AOL model from one depending upon subscriptions to one that is based upon Internet advertising, there was positive growth in the advertising sales as it rose 26 percent to $392 million for the quarter. The problem they are having is that the subscription side is shrinking faster than the advertising area is growing. The overall revenue for AOL dropped by 7 percent for the quarter.
The revenue from the Time publishing division which includes the magazines Time, People and Sports Illustrated, also dropped dramatically at 12 % lower than last years totals.
Even though AOL looks like it a real loser now, and it will probably go through some painful adjustments, that is the area that I see that has a lot of upside potential as I posted about yesterday.
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