AOL Time Warner reports biggest loss in US history
AOL Time Warner, the world's largest media company, has reported a net loss of $54.24 bn (€60.7bn) for its first quarter.
It is the largest quarterly loss for a US company due to a massive balance sheet writedown mandated by new accounting rules.
The writedown exceeded the previous largest quarterly loss of $41.8bn (€46.8bn), which JDS Uniphase reported in its first quarter of 2001.
AOL Time Warner's loss was entirely due to a writedown because of a sharp decline in the company's stock, which has fallen by more than half since the merger of America Online and Time Warner was announced in January of 2000.
In the same period a year ago, AOL Time Warner had a net loss of $1.4bn (€1.5bn)
Under the new accounting rules, goodwill - the premium paid for an acquisition above the value of the tangible assets acquired - can no longer be written off gradually over a period of up to 40 years.
Instead, companies must constantly weigh the value of their investment in the acquired company and write off any reduction in value as it occurs.
Without the effect of the accounting change and other one-time effects, AOL Time Warner's results beat analyst expectations.
Earnings per share rose to 18 cents a share, compared with 16 cents per share in the same period a year ago and above the 14 cents per share that analysts polled by Thomson Financial/First Call had been expecting.
