AOL Time Warner saw a welcome return to profit in the first quarter of 2003 and now seems ready to put behind it the trauma of the past year.
Shares in the world’s biggest media company rose 5% yesterday upon news of a Q1 net profit of $396 million. This compares with a $54 billion loss in the same period last year when AOL was forced to take a massive writedown in the value of its online assets (see
Box Office Success Offsets AOL Time Warner Losses).
Revenues rose 6% to $10 billion while earnings before interest, taxes, depreciation and amortisation (EBITDA) exceeded expectations and were up 14% year on year to $2 billion.
Despite these glimmers of hope, the media titan still faces some major challenges. As foreseen by the management, advertising revenue at America Online fell more than 40% in the first quarter against the same period a year ago (see Difficult Times Ahead For America Online) and the internet division is struggling to attract new subscribers.
In addition, AOL remains under investigation by the Securities and Exchange Commission over alleged accounting breaches (see AOL Identifies Accounting Irregularities) and the company remains $26 billion in debt. It has taken steps to secure its financial position and this week agreed to sell its 50% share in the Comedy Central network to Viacom for $1.23 billion (see International).
