Warburg runs option numbers on AOL TW


According to UBS Warburg LLC, AOL Time Warner Inc.'s 2001 net earnings would
have been $1.413 billion less in 2001 if its stock options ($627 million, or
about 14 percent of outstanding shares) were recorded as a compensation

In the wake of growing accounting scandals at other companies, The Coca-Cola
Co. announced Monday that it would begin recording stock options as a business
expense, and Warburg decided to run the numbers on some companies.

Investment guru Warren Buffet told Reuters Coke's move was a classy move, and
he would be more 'comfortable' if other companies followed suit and gave
shareholders a better gauge of compensation costs.

Warburg said AOL Time Warner would have lost $1.43 per share in 2001 rather
than $1.11 -- a difference of $0.32. But it estimated that the additional charge
going forward would be in the 10- to 15-cent range if options were expensed.

By comparison, Warburg estimated that Internet company Yahoo! Inc.'s 2001
loss would have been $938 million, and not $92.7 million ($1.73, not 16 cents),
if its options (23 percent of outstanding shares) were expensed.

Warburg maintained its 'strong buy' rating for AOL Time Warner at a 12-month
target of $26 per share.