The agreement between the two companies calls for Bertelsmann to transfer 80 per cent of its current stake to AOL Time Warner on Jan. The company also confirmed that it will acquire Bertelsmann AG's 49-per-cent stake in AOL Europe, allaying concern that AOL Time Warner would dilute its stock by paying for the stake with equity. Many analysts had already been cutting their earnings estimates for AOL Time Warner in recent weeks after the company fell short of its aggressive 2001 targets.ĭespite the warnings, AOL Time Warner's share price gained about 3 per cent to $33.65 in after-market trading Monday. "Looking at 2002, we have made conservative assumptions about the economic environment and the state of advertising," CEO Jerry Levin said in a statement. The company said it is assuming no economic recovery in the coming year. "We will try not to overpromise," said Richard Parsons, the company's co-chief operating officer and in-coming chief executive officer. The company had earlier said it expected double-digit earnings growth in fiscal 2002.ĪOL Time Warner also provided preliminary results for 2001, saying it expects revenue to increase about 5 per cent to $38-billion, and earnings to jump about 18 per cent to almost $10-billion.įor the fourth quarter, earnings should increase about 14 per cent to more than $2.7-billion, with revenue growing about 3 per cent to $10.5-billion, the company said Monday.ĪOL Time Warner blamed a weakening advertising market for the pull-back and said it is forecasting no improvement in its customers' spending during this fiscal year. It also said it expects earnings to grow by between 8 and 12 per cent during the year. The company, the poster child for multimedia convergence, also warned that it expects revenue and earnings before interest, taxes, depreciation and amortization to remain flat during its first quarter and increase by between 5 and 8 per cent to about $38-billion during fiscal 2002. The writedown may top even the massive $50.1-billion writedown posted during the last calendar year by Canadian technology giant JDS Uniphase Corp. Goodwill is calculated as the difference between the purchase price of an asset and its book value. The new accounting rules are expected to slash AOL Time Warner's annual amortization by more than $7-billion but, according to the company, won't affect its operations.ĪOL Time Warner's expected writedown will reduce the so-called goodwill value created when America Online Inc. law that changes the way merged companies can write off goodwill and intangible assets with indefinite lives. Its gearing position is also rising and the fallout of the coronavirus pandemic and shift towards a low carbon society looks set to cause weaker demand for energy and lower prices over a prolonged period.The massive charge is a result of a new U.S. The charge of up to $17.5 billion would be the biggest since BP took a $32 billion hit in 2010 following the Gulf of Mexico oil spill. They said investors would look more kindly on a temporary cut, defined by a length of time or until oil prices return to a certain level.Ī dividend cut now certainly seems likely but there’s plenty more for investors to digest in Monday’s unexpected update. Analysts at investment bank Cowen, remained neutral on the stock pending clarity on any revised dividend policy. BP may be “softening shareholders up” for a dividend cut when it reports second quarter results on Aug. Instead, BP allowed its debt to rise by $6 billion to $51.4 billion - taking its gearing position - debt to capital ratio - to 36.2%, above its long-term target of 20-30%.Ĭut its dividend for the first time since World War II in a move that stunned the market. Investors rejoiced at the end of April as BP maintained its dividend despite profits plunging 66% in the first quarter amid a coronavirus-driven collapse in demand. Last week it announced plans to cut 10,000 jobs worldwide - around 14% of its workforce - after the global slump in oil demand. The British energy giant will also review plans to develop some of its oil and gas exploration sites. The expected charges of between $13 billion and $17.5 billion in its second quarter results are due to the 2050 strategy and the impact of coronavirus, BP said. In February - shortly after Bernard Looney was promoted to CEO - BP set out an action plan to become a net zero on carbon by 2050. Brent crude August futures were trading at $38 per barrel on Monday. The London-headquartered multinational lowered its long-term price assumptions - 2021 to 2050 - for Brent oil to an average of $55 per barrel, from a previous estimate of $70.
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