AOL Time Warner offered a conservative outlook for 2002 as it revealed preliminary results for 2001 which failed to meet expectations. For the full year 2001, AOL Time Warner said it expects to post EBITDA growth of around 18% to just under $10 billion. Revenues for the full year are expected to grow approximately 5% to just over $38 billion and free cash flow for 2001 will increase by more than 200% to approximately $3 billion. The company said that Q4 EBITDA is expected to grow approximately 14% to over $2.7 billion and that revenues will grow approximately 3% to $10.5 billion.
The 2001 results exclude certain one-time nonrecurring charges that are expected in Q4, including approximately $50 million of merger-related costs including the acquisition of IPC last July (see
AOL Takes IPC Media For £1.15bn).
Outgoing chief executive Jerry Levin said: “In 2001, AOL Time Warner achieved important goals in all of its divisions despite a difficult economic environment that included the weakest advertising market in memory. The balance and strength of our diverse businesses helped us ride out the tough economy, led by robust subscriber growth across America Online, Time Inc., HBO and Time Warner Cable. Total AOL Time Warner subscribers now exceed 147 million worldwide. We also reduced costs substantially, and financial discipline and productivity gains will continue to be major priorities in the years ahead.”
In May, Levin will retire and Richard Parsons, considered by most to be more conservative than Levin, will take over. On Monday, Parsons said “We got no credit for our achievements because of the high expectations we set for ourselves. In fact, I think we were penalised for them.” He suggested that AOL Time Warner will be more conservative in its estimates in the future.
Earlier this week, AOL Time Warner lowered its outlook for 2002 from EBITDA growth of 12% to 8%, and notably commented that its business plan “assumes no recovery in the economy.” Should the economic climate change, however, the company is ‘poised’ to benefit from any upturn in the economy in 2002.
