Analysts see AOL Time Warner slide


Two influential analysts have called into question AOL Time Warner's ability to keep financial promises, cutting their forecast for the company's revenues and cash flow.

Morgan Stanley's Richard Bilotti and Mary Meeker said that AOL's heavily-touted target of $40 billion in sales and $11 billion cash flow for the full year "have a very low likelihood of being achieved." AOL's Steve Case and Jerry Levin have hammered home those numbers to justify the AOL's takeover of Time Warner in January. The company has dismissed any skepticism of its ability to deliver.

In a report sent out Tuesday, the analysts said that "a weak economy and a slumping advertising market have significantly dimmed the prospects for reaching the company's 2001 targets." Basically, the pair sees slow ad sales keeping AOL $1 billion short of its sales forecast and $500 million short of its cash flow forecast. They see no shortfall in AOL's cable systems but big problems at Turner Broadcasting, the WB, and the Warner Bros. film unit.

An AOL spokesman said simply that "we have not changed our guidance" on performance for the rest of the year.
- John M. Higgins