Time Warner (TWX) shares hit a four-year high on Friday as they broke the $20 mark for a a short time. It finally settled in at $19.99 for the session. It was the first time since 2002 that it broke through the $20 barrier. The stock is up 14.6 percent for the year.
Credit Suisse analyst William B. Drewry said concerning the growth Time Warner's stock: it "has finally worked in a significant way." He added that the strength in the stock is a reflection of the growing strength in the overall media industry as a whole.
I think there are a couple of specific reasons. One is that the AOL strategy seems to be picking up steam much faster than anticipated, and the online advertising market looks like it will surge for years; they picked the perfect time to make the transition.
AOL has also been signing deals with other media companies to offer video on demand to its viewers. A move that should increase its ad revenue significantly.
With Time Warner understanding the significance of the Internet, they are starting to realize some of the benefit of the originally disastrous merging with AOL. Now the time is here where it may benefit tremendously.
Warner seems to be backing it up with action as it has declared a regular quarterly dividend of $0.055 per share on its Common Stock, keeping it in line with the last dividend declaration.
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