Earnings Preview: Time Warner

Time Warner (TWX) is expected to report Q1 earnings before market open on Wednesday (April 30), with a conference call scheduled for 10:30 am ET.

Guidance

Analysts are looking for a profit of 23c on revenue of $11.39B. The consensus range is 21c to 26c for EPS, and revenue of $11.13B to $11.73B, according to First Call.

In February, Time Warner forecast 2008 EPS of $1.07 to $1.11 vs. First Call consensus of $1.09. On April 14, the company announced it would cut 450 jobs from its New Line Cinema unit; additionally, several days later, it was reported that Time Warner's AOL unit would lay off about 100 employees in its web-ad selling unit.

Inside sources have said that Yahoo (YHOO) is close to an agreement to combine its operations with the AOL unit, in an attempt to torpedo Microsoft's (MSFT) $44.6B takeover offer for Yahoo. Other positive news for AOL includes a big advertising deal with Verizon (VZ), in which it is slated to become the only form to represent Verizon's advertising inventory.

Analyst Views

As for the quarter, Steve Tananbaum, of GoldenTree Asset Management, told Barron's that cable companies such as Time Warner have always traded at discounts to their private-market values. Tananbaum expects the company, however, to have high-single-digit cash-flow growth this year. He said that Time Warner has a catalyst, given that CEO Jeffrey Bewkes "has telegraphed he's going to be splitting up the company." Time Warner and other cable companies are likely to continue delivering the growth rates they've achieved over the last 10 years.