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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED
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To: Jim Willie CB who wrote (45999)1/8/2002 11:00:30 PM
From: Mannie  Read Replies (1) of 65232
 
<Noncash charge of $40-60 billion>...with a B. wow.

Not So Swell for AOL

Shares of AOL Time Warner (NYSE: AOL) fell 2% today after the company unveiled
a gloomy forecast after the bell yesterday.

The media and Internet giant told investors it would fall short of already lowered
targets for the fourth quarter of 2001, and lowered expectations for 2002. In
addition, it said it would take a noncash charge of $40 billion to $60 billion for the
first quarter of 2002, related primarily to the decline of AOL's stock price since it
announced the merger with Time Warner, as well as a change in accounting rules
pertaining to goodwill on the balance sheet.

That charge will be one of the largest in history, but it means nothing to the
company's actual cash position. The situation is similar to JDS Uniphase's (Nasdaq:
JDSU) $44.8 billion goodwill write-down several months ago, which was explained
well by Bill Mann.

In predicting 2002 revenue growth of 5%-8%, CEO Jerry Levin said his company
"assumes no recovery in the economy." That's interesting, particularly in light of
renewed economic optimism across most sectors, but we applaud Levin's cautious
approach and his unwillingness to pump expectations for short-term gain.
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