By Kenneth Li
NEW YORK (Reuters) - Time Warner Inc
Time Warner's shares, which have fallen as much as 36 percent since 2007, rose more than 2 percent in morning trading.
The media conglomerate, which owns AOL, CNN and Time Inc, forecast adjusted operating income before depreciation and amortization to rise 7 percent to 9 percent this year, which could exceed Wall Street's forecast of 7 percent growth.
While profit growth is sharply lower than 2007's 17 percent rise, that is largely due to Time Warner Cable's acquisition of Adelphia cable systems, which closed in mid-2006. Excluding gains from that deal, 2007 growth would have been 8 percent.
Newly appointed Chief Executive Jeffrey Bewkes is widely expected on Wednesday to discuss a plan to spin off the company's ownership of Time Warner Cable
Investors are also looking for any clues on whether Time Warner should keep or spin off AOL, which was restructured last year to focus on being a one-stop shop for online advertising. Pressure on Time Warner to do something about AOL have accelerated after Microsoft Corp's
A deal, which would eliminate two potential partners or buyers of AOL but raise the valuations of online advertising assets, will redraw the Internet advertising landscape and consolidate power between Microsoft and Google Inc
"Looking ahead, we've identified key initiatives that will enable us to deliver strong business results long into the future while increasing our returns to our shareholders," Bewkes said in a statement. "We'll aggressively control costs ... We'll make sure that Time Warner has the right businesses in the right structure.
"In change lies opportunity."
Time Warner said fourth-quarter profit fell to $1 billion, or 28 cents per share, from $1.8 billion, or 44 cents per share, a year earlier, when it logged a big gain from sales of AOL units and other items.
Excluding special items, earnings were 29 cents a share, matching the analysts' average forecast, according to Reuters Estimates.
Year-earlier profit, excluding the gain, was 22 cents a share.
Revenue rose 2 percent to $12.64 billion, in line with Street forecasts.
"The numbers were slightly above our expectations across the board, led by cable," said analyst Christopher Marangi of Gabelli & Co, which owns shares of Time Warner. "I think the main event is hearing about the strategic direction for the company."
Once the world's largest media company by market capitalization, Time Warner has lost that title to News Corp
Time Warner's results contrast those of News Corp
Time Warner has not given up on AOL yet. On Tuesday, it purchased buy.at -- its fifth online advertising-related acquisition in 12 months.
AOL's quarterly revenue fell 32 percent, dragged down by a loss of 740,000 subscribers, while adjusted operating profit rose 29 percent. Online advertising growth, a closely watched barometer of progress for the division's restructuring, rose 10 percent.
Movie studio revenue rose 13 percent, while operating profit before items increased 46 percent, boosted in part by the box office sales of the film "I Am Legend."
Time Warner said it expected 2008 earnings per share of $1.07 to $1.11 from continuing operations, below Wall Street's projection of $1.12.
The stock rose 2.7 percent, or 42 cents, to $15.81 in morning New York Stock Exchange trading.
(Editing by Lisa Von Ahn and Maureen Bavdek)
