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Stock Analyst Update

Time Warner Outperforms the Advertising Rumors

Tuesday's price drop gives long-term investors a chance to buy in.

What Happened?
After seeing its stock decline 16% Tuesday because of rising fears of a slowdown in Internet advertising, Time Warner (TWX) reported earnings Wednesday that were driven by a 17% increase in advertising. Operating performance during the first nine months of 2000 continued to be strong; EBITA--a proxy for cash flow--increased solidly across the company's businesses, with cable networks up 15% to $1.2 billion and cable TV up 13% to $1.4 billion. Cable TV was powered by a 425% increase in digital cable subscribers to 1.3 million and a 194% increase in high-speed Internet customers to 719,000.