AOL Time Warner reported a yearly loss of almost $100 billion, the largest loss in U.S. corporate history, after taking a $45 billion charge for its fourth quarter on Wednesday. Chairman and chief executive Richard Parsons cautioned that 2003 will be “a challenging year” because of continued losses at the media giant’s online unit.
AOL REPORTED A fourth-quarter net loss of $44.9 billion, or $10.04 a share, after taking the non-cash charge to write down the value of its embattled America Online business and other assets, compared to a year-ago loss of $1.8 billion, or 41 cents a share.
The company, which in the first quarter had reported a net loss of $54 billion after writing down the value of assets, posted a full-year 2002 net loss of $98.7 billion.
The full-year loss exceeded the gross domestic product of Egypt in 2001.
At the beginning of the media company’s earnings report to investors, Parsons said that Ted Turner would be stepping down as vice chairman of the board to pursue other activities. Turner is the largest individual investor of AOL.
Parsons projected 2003 free cash flow would be would be essentially flat with last year, because of expected 15-25 percent revenue declines at the online unit and slowing ad revenue growth at the cable TV networks because of “less revenue from programmers promoting new [cable channel] launches.”
Online advertising revenues were down 44 percent in 2002.
“We’re clearly disappointed with AOL’s performance,” Parsons said, referring to the online unit’s losses. “Revitalizing AOL remains our chief priority.”
He called 2003 a “reset” year for the company.
Parsons also outlined the company’s plan to reduce its current $26 billion debt down to $20 billion by the end of 2004, including a spin-off its cable TV properties later this year.
The significant declines from AOL were offset by strong growth at other divisions.
Strength in the company’s film/entertainment business, with hits like the “Lord of the Rings” sequel, and cable networks offset weakness in the fourth quarter at America Online, which has been suffering from a sharp slowdown in advertising spending and subscriber growth.
The quarter capped a tumultuous year. About two years after AOL completed its $106.2 billion purchase of Time Warner, the old media veterans from Time Warner are running the show and the key architects of the deal have been forced out amid calls from angry investors that view the merger as a failure.
AOL Time Warner said its revenue in the quarter grew 8 percent to $11.4 billion.
Earnings before interest, taxes, depreciation and amortization (EBITDA) — a key measure of cash flow —- rose 16 percent to $2.8 billion from a year-earlier for the quarter.
Analysts polled by Multex expected, on average, EBITDA of $2.6 billion.
The company said it sees revenue growth for the 2003 full year in the mid-single digits and said it sees EBITDA to be essentially unchanged to down in the low-single digits.
Earlier on Wednesday, AOL Time Warner said it sold its 8.4 percent stake in Hughes Electronics Corp. as part of its efforts to cut its debt load.
The company said it plans to reduce total consolidated debt to approximately $20 billion by the end of 2004.
Reuters contributed to this story.
