AOL Time Warner Inc. on Monday said it would take a first-quarter charge of up to $60 billion because of new accounting rules, and executives of the world's largest Internet and media company reined in forecasts of earnings growth for 2002, citing the weak economy. 

AOL Time Warner said it sees earnings before interest, taxes, depreciation and amortization, or EBITDA, a key measure of the health of media companies, to grow 8 percent to 12 percent for the year, with EBITDA flat in the 2002 first quarter. Previously, the company had said it expected double-digit EBITDA growth in 2002. 

AOL Time Warner said it expects 2002 revenue growth of 5 percent to 8 percent. 

The company also confirmed it would buy Bertelsmann AG's  49 percent stake interest in AOL Europe in an all-cash deal. 

A CONSERVATIVE APPROACH 

Chief Executive Gerald Levin in a conference call with analysts said the company would take a more conservative stance as a result of the troubled economy and what he referred to as the worst advertising market in memory.'' 

``We were clearly not immune to the widespread economic decline,'' Levin said. ``Our full-year targets proved too high.'' 

Richard Parsons, in his first call as CEO-designate, said the emphasis from today will be on execution, making investments necessary to drive convergence and making sure all parts of the company are working together. 

He said fourth-quarter 2001 revenue growth would be about 3 percent with EBITDA up 14 percent. The weak spots for year was advertising, with its advertising and commerce line showing 3 percent decline for full year. 

The company said its 2002 business plan assumes no recovery in the economy. 

Shares of AOL traded at $33.30 in after-hours on Instinet from $32.68 at Monday's close. 

ANALYST EXPECTED SOME OUTLOOK CHANGES 

Wall Street analysts had already been cutting their estimates for AOL Time Warner's earnings in recent weeks amid expectations the company would tame forecasts after falling short of its aggressive 2001 targets last year. 

While its revaluation in regard to new accounting rules has not been completed, AOL said it expects to post a one-time, noncash charge of $40 billion to $60 billion in its income statement for the first quarter of 2002, reflecting overall market declines since its merger was announced in January 2000. 

For the full year 2001, AOL Time Warner said it expects to post EBITDA growth of about 18 percent to just under $10 billion. Revenues for the full year are expected to grow approximately 5 percent to just over $38 billion. Free cash flow for 2001 will increase by more than 200 percent to about $3 billion. 

The company said fourth-quarter EBITDA is expected to grow by about 14 percent to over $2.7 billion and that revenues will grow some 3 percent to $10.5 billion. 

The 2001 results exclude certain one-time nonrecurring charges expected in the fourth quarter, including about $50 million of merger-related costs and about $1.5 billion to $1.8 billion of noncash charges primarily related to the revaluation of certain equity investments and market declines in the company's portfolio. 

Meanwhile, Bertelsmann will transfer 80 percent of its current stake in the European Internet venture to AOL Time Warner on Jan. 31 for $5.3 billion in cash. AOL Time Warner will buy the remaining 20 percent for $1.45 billion in cash in July 2002.