AOL fourth quarter loss widens

Continuing to show the growing pains of merging two media giants, AOL Time Warner reported a net loss of $1.8 billion for its fourth quarter. The loss most visibly reflected a $1.7 billion write-down in AOL’s stakes in Time Warner Telecom and Hughes Electronic Corp. and $45 million in costs related to the merger of AOL and Time Warner.

Nevertheless, COO Dick Parsons, who will assume CEO responsibilities in several months when Jerry Levin retires, said the performance results should be expected as the company pursues a long-term vision.

“This is not an overnight phenomenon,” Parsons said. “Convergence is an evolutionary process. To expect radical changes in the short term is not practical.”

In the fourth quarter of 2000, the company reported a net loss of $1.1 billion and a per-share loss of 25 cents compared with the 2001 fourth quarter loss of 41 cents. The results were in line with a lowered estimate outlook the company had issued earlier this month.

Dick advised analysts to see the results as part of a long-term move into a merged company that will be “delivering information, entertainment to consumers that would change consumers’ consumption habits.”

“My focus as the CEO will be long-term business, building value over time,” Parsons said. Quarterly and short-term results, he said, “are important in how the company is doing in terms of pursuing the longer-term vision, but short-term results are a means to an end, not an end to themselves. I think we’ve gotten that formulation a little bit out of whack in American business.”

AOL Time Warner, he said, continues to focus on its combined businesses, and “we intend to manage this company as one company, a single integrated whole with one bottom line.”

That bottom line was impacted by a reliance on advertising, he admitted, but “the reality of our performance, particularly when measured against the industry, is very strong. No other media company or any other company that had substantial reliance on advertising revenues came close to the results we achieved.”

For all of 2001, AOL Time Warner reported a net loss of $4.9 billion, compared with a net loss of $4.4 billion in 2000, or $1.11 per share vs. $1.02 per share. Despite Parsons’ plea for patience, the stock was down in early trading.