AOL Time Warner to restate its results
Thursday 24 October 2002
AOL Time Warner is to restate two years of results because of accounting problems at its America Online business in a move that will cut the group's revenues by $190m (£123m) for the period from June 2000.
The move, which will also take $97m off the group's earnings, took Wall Street by surprise and was announced as the media giant posted a third-quarter profit last night. AOL Time Warner only started its own internal investigation into its internet unit's accounting practices in August after the US Department of Justice and Wall Street regulators began examining the way the AOL had booked some advertising deals.
"While we didn't necessarily expect they would come out with a restatement as quickly as they did, it represents a smart proactive effort to try to get past the [regulators'] scrutiny and pressure they've been enduring," Fred Moran, an analyst at Jefferies & Co, said.
At the time of its second-quarter results, the company warned AOL may have improperly accounted for $49m of advertising deals. Last night AOL Time Warner said its internal review would continue, but it did not expect to make further restatements.
The results were in line with analysts' forecasts, with weakness at AOLpartially offset by strength at publishing, cable and film units. Net income in the third-quarter rose to $57m, compared with a $997m loss a year ago. Revenues rose 6 per cent to $10bn.
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