What's the problem with high performance in the last quarter you're being compared with? Outdoing it the next year. That's the issue that Time Warner (TWX) faces when profits come out for last quarter's profits in comparison to last year's strong numbers.
They had an uphill battle as it would be difficult to reproduce something comparable to the hit movie "Harry Potter and the Goblet of Fire." Another problem is that the revenue for AOL isn't growing at the pace the company hoped for.
As a result, the numbers for the last quarter of 2006 are expected to decline from 2005s numbers. Projections are that the world's largest media company will earn about 23 cents a share on revenue of $11.1 billion. Last year for the quarter they earned 25 cents a share on 11.89 billion in revenue.
CIBC World Markets analyst Jason Helfstein noted that the page views for AOL came to 44.4 million last quarter, which was down from the third quarter by 9 percent, citing Comscore. He said that the reasons for the overall company performance are "weaker than expected page views at AOL, lower box office receipts [than the prior year], and a more conservative stance on [cable] Networks margins."
With AOL I think it's a matter of lag between consumers former interactions with the company as an Internet Service Provider, and their transformation into an online portal with an advertising model. Another factor that isn't addressed is if AOL is using new technology like Ajax, which by its nature will lower the page view as a key indicator or measurement of success.
The growing use of broadband should ensure that AOL should rise and be a key component of Time Warner's success. The movie division is another matter, although the next installment of Harry Potter should help their numbers for the year as it's set to be released this year.
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