Analysts Respond To Time Warner’s Showing, Plans

Richard Greenfield, Fulcrum Global Partners: “We believe the most likely partner for TWX is MSFT as MSFT needs to transform MSN into a compelling destination – meaning it needs content, which AOL has. If a transaction occurs, we would expect the valuation of the deal to highlight a $15-$20 bn value for AOL (in-line with our valuation, but significantly above the level it is being valued at by investors).”

Jessica Reif Cohen, Merrill Lynch: “Strong results and buyback increase to relieve pressure on management — Time Warner’s results were well ahead of both our estimates and consensus. In addition, the company announced an increase in its share buyback from $5bn to $12.5bn. The company also announced the resignation of Steve Case from the TWX Board of Directors on Monday. With these three developments, management has neatly addressed several main concerns of investors (including operating results and capital structure) and has gained significant breathing room in its ongoing battle with dissident shareholders, in our opinion.”

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