AOL downbeat on 2003 ad prospects
Published: 03 Dec 2002 13:51 GMT
AOL Time Warner said on Tuesday it expects to see advertising and commerce revenue at its America Online unit fall between 40 and 50 percent in 2003. In a statement ahead of the company's meeting with analysts in New York, AOL Time Warner cut the outlook for its AOL division, which has been a source of concern for Wall Street.
The biggest problem for AOL is that it is recognising lower revenue from its previous big-ticket ad deals. For 2002, the company is expecting to see revenue at America Online between $8.8bn and $9bn, with advertising and commerce revenue between $1.5bn and $1.6bn.
America Online's ad division has been a particular source of concern. In the third quarter, advertising and commerce revenue dropped 48 percent from the previous year. The company recently let go about 90 people in its ad sales division.
Analysts are hoping to get an outline of AOL Time Warner's plan to turnaround AOL. Executives are likely to outline plans to turn AOL into a broadband service with exclusive content, analysts said.
Tuesday's analyst meeting features most of the top brass at AOL including America Online chief executive Jonathan Miller, chairman Steve Case, AOL Time Warner chief executive Richard Parsons and media and communications chairman Don Logan.
The company said the drops in AOL's advertising sales will be offset by growth in subscription revenue. AOL revenue growth will be flat from 2002 to 2003, the company said.
Earnings before interest, taxes, depreciation and amortisation (EBITDA) are expected to drop 15 to 25 percent year over year, due largely to the drop in high-margin advertising and commerce revenue.
Companywide, AOL Time Warner expects to hit the low end of earlier predictions of 5 to 9 percent EBITDA growth. Revenue for the company as a whole should grow 5 to 8 percent.
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