This summary is based on the second quarter fiscal 2008 earnings call conducted by TimeWarner Inc. (TWX) on August 6, 2008.
Management:
President, CEO and Director: Jeffrey L. Bewkes
CFO and EVP: John K. Martin Jr.
VP of IR: Doug Shapiro
Key Investor Issues:
- Q2 revenues were $11.6 billion versus $11 billion in the year ago quarter.
- The quarter-to-quarter total operating loss was flat at $1.9 billion.
- The company repurchased about 154 million shares for $2.8 billion for the period August 1, 2007 to August 5, 2008.
Half Year Financial Highlights:
- Cash provided by Operations was $4.9 billion.
- Free cash flow totaled $2.9 billion, representing a 46% conversion rate of Adjusted Operating Income before Depreciation and Amortization.
- As at June 30, 2008, the net debt was $34.6 billion, a decrease of $1 billion from $35.6 billion at the end of 2007 due to the generation of free cash flow.
Second-Quarter Financial Highlights:
The adjusted operating income before depreciation and amortization rose 4% to $3.2 billion.
- The growth at the Cable, Networks and Filmed Entertainment segments more than offset declines at AOL and Publishing segments.
- The operating income increased 1% to $1.9 billion.
The diluted income per share from continuing operations was 22 cents for the quarter.
- This compares with 25 cents in the last year’s second quarter.
- The current and prior year amounts included certain items affecting comparability.
- The net impact of such items was to decrease the current year quarter’s results by 2 cents per share and to increase the prior year quarter’s results by 3 cents per share.
Segmental Performances:
AOL:
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Revenues for the quarter declined 16% to $1.1 billion.
- This was a result of a 29% decrease in subscription revenues offset partly by a 2% increase in advertising revenues.
- The decline in subscription revenues was mainly due to a decrease in domestic AOL brand subscribers resulting from AOL’s strategy to offer its e-mail and other products free of charge to Internet consumers.
- Advertising revenues benefited from growth in sales of advertising on third-party Internet sites and paid-search advertising, offset partly by a decline in display advertising on AOL Network sites.
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The adjusted operating income before depreciation and amortization decreased 28% to $350 million.
- This was due to lower subscription revenues and higher traffic acquisition costs offset partly by reduced marketing, network and other expenses.
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The operating income declined 36% to $230 million.
- The decline was largely due to lower adjusted operating income before depreciation and amortization.
- During the quarter, the segment had 111 million average monthly domestic unique visitors and 56 billion domestic page views.
- This translates to 167 average monthly domestic page views per unique visitor.
- As of June 30, 2008, the AOL service had 8.1 million U.S. access subscribers, a decline of 604,000 from the prior quarter and 2.8 million from the year-ago quarter.
- This is a reflection of subscriber losses partly due to AOL’s strategy to prioritize its advertising business.
Cable:
