07:25 TWX Time Warner's great new hope - Barron's (17.23 )
Barron's highlights Time Warner, saying that it might not be exactly what investors had in mind to unlock the value in Time Warner, but the prospect of a bidding war for its AOL unit could be just the thing to get the stock moving. In the past few months, an investor group led by Carl Icahn has taken a 2.8% stake in Time Warner. It has been agitating for a $20bn stock buyback and a spinoff of the cable business. And, in the past few weeks, Microsoft (MSFT), Google (GOOG), Comcast (CMCSA) and Yahoo (YHOO), have been reported to be in serious discussions with Time Warner about buying a stake in AOL. "You've got these 4 very deep pockets who clearly have an interest in AOL," says Henry Berghoef, of Harris Associates. Though Berghoef is loath to assign a value to the AOL division, which accounts for more than 20% of Time Warner's $42bn in annual rev, he notes that "when you look at the kind of prices being paid for Internet-related properties, the odds seem good you would get a very attractive price." Indeed, a JP Morgan report last month assigned an incremental value of about $3-4 per Time Warner share to AOL. Berghoef believes Time Warner has an intrinsic value at the high end of a range of 21-27. "In effect, what you've got with AOL is a call option on a potentially much greater value," he says. Given Time Warner's recent price around 18, "I don't think you're paying anything for that call option," Berghoef adds. "It's one of the things that really still makes Time Warner attractive to us." |
