Reuters Finance News
AOL Shares Up After Comments on Ad Sales
Jun 20 1:57pm ET
By Reshma Kapadia
NEW YORK (Reuters) - The shares of AOL Time Warner Inc., the world's largest Internet and media company, rose more than 3 percent Wednesday after Chief Executive Gerald Levin told Reuters advertising revenues have stopped declining.
"Although it is stating the obvious, the first thing that happens before a pick-up is stabilization, so in a market in which most things are continuing to deteriorate, even stabilization is viewed as a significant positive," Merrill Lynch analyst Henry Blodget said, adding the comments could "absolutely" be the reason for the stock being up.
AOL Time Warner shares rose $1.52 to $51.36 on the New York Stock Exchange. The shares are off about 11 percent from year-earlier levels, but outperforming many of its Internet rivals.
"I'm not sure there is an upturn yet, but I do think advertising revenues are stabilizing," Levin told Reuters in an interview at the Cannes International Advertising festival. "We haven't changed our (2001) estimates".
Advertising spending has declined amid the dot-com shakeout and a slowdown in the U.S. economy, weighing on many Internet and media companies.
"The question then becomes, 'show how long you have to wait before stabilized becomes growing again?"' Blodget added.
He added that the shares of other companies, such as Oracle Corp. , also rose after executives said they may have seen bottom. At a time when companies have been cutting growth targets and warning about prospects, such comments have cheered investors.
Salomon Smith Barney analyst Lanny Baker said AOL Time Warner, with its stable of assets that include Time and Fortune and 24-hour cable network CNN and the WB, has been better insulated from the decline in ad spending than some of its peers.
"I wouldn't run with that one comment to use that as the linchpin that the ad economy has turned around," Baker said. "If ad trends are stabilizing, I think AOL Time Warner will be able to say that long before second and third tier companies will be able to."
Levin also told Reuters no further job cuts or increases in AOL prices were needed to meet 2001 targets set earlier this year at the completion of $106.2 billion merger of AOL and Time Warner.
The company set targets of $11 billion in earnings before interest, taxes, depreciation and amortization (EBITDA) and $40 billion in revenues in 2001. |
