AOL Time Warner Inc. said Wednesday its fourth-quarter net loss widened due to a $1.7 billion write-down of some investments, while cash earnings fell short of the rosy predictions it issued after merging, as the online business matured and advertising slumped.

The world's largest Internet and media company said the net loss rose to $1.82 billion, or 41 cents a share, from $1.09 billion, or 25 cents a share, a year earlier.

The latest results included the noncash write-down of such investments as Time Warner Telecom Inc. and a charge from the decline in the carrying value of its investment in Hughes Electronics Corp.

AOL Time Warner, which houses cable news network CNN, People magazine, artists like Madonna, and television shows like "Friends," said earnings before amortization of goodwill and charges rose to 33 cents a share from 28 cents a year earlier. Revenues increased 4 percent to $10.63 billion, boosted by strong subscriptions at AOL and its cable units.

The results were in line with its own lowered outlook earlier this month and with analysts' estimates.

"There were no surprises based on what we heard on Jan. 7," said Friedman Billings Ramsey analyst Robert Martin.

For the first quarter, it said it expects cash flow and revenues to be little changed from a year earlier.

The company reiterated its 2002 outlook of 5 percent to 8 percent growth in revenues, and 8 percent to 12 percent growth in cash flow, including its acquisition of AOL Europe and magazine publisher IPC Media.

AOL Time Warner revised its growth projections twice after standing for months by aggressive targets it set last January, even as rivals lowered expectations.

After the Sept. 11 attacks, the protracted ad slump and the economic slowdown, the company was forced to reduce expectations and again lowered targets earlier this month.

AOL Time Warner said earnings before interest, taxes, depreciation and amortization (EBITDA), a widely watched measure of cash flow for media companies, rose 14 percent to $2.76 billion in the quarter.

For the 2001 year, EBITDA rose 18 percent to $9.91 billion, while revenues climbed 6 percent to $38.23 billion. The results fell short of targets of $11 billion in EBITDA and $40 billion in revenues that were set after AOL bought Time Warner, but in line with its revised outlook this month.

The company calculated year-earlier results on a pro-forma basis, assuming that America Online had completed its $106.2 billion purchase of Time Warner by January 2000, rather than the actual closing date of January 2001.

AOL CASH FLOW UP 10 PCT

It added 1.9 million new members to its flagship Internet service in the fourth quarter, bringing the AOL subscriber base to 33.2 million. AOL added 851,000 international members in the quarter, for a total of 8 million.

Cash flow and revenues at AOL grew 10 percent during the quarter. The unit has come under pressure as the company tries to shift some subscribers and sign up new ones to its high-speed services.

"AOL (Internet unit) was a little light on the top line but made it up on the cost line," Martin, the analyst, said.

AOL advertising and commerce revenues fell 7 percent to $637 million from $686 million a year earlier.

"I think the good piece of news out of it was that the ad business was to blame for this slowdown in the U.S. access business," said Mike Gallant, analyst at CIBC. "So investors should take some comfort in that. There doesn't appear to be anything funny going on (in the AOL unit)."

The company's shares have taken a beating in recent sessions, hovering near lows not seen since December 1998. Shares fell 50 cents to $26.20 Wednesday on the New York Stock Exchange.

Some institutional investors said they were waiting to see what the new management will do in the current difficult climate. AOL Time Warner has named co-Chief Operating Officer Richard Parsons to replace Chief Executive Gerald Levin, who is retiring in May.

So far this year, AOL Time Warner has taken a conservative outlook, a marked contrast to the aggressive growth targets it set last year, in hopes of promising less and delivering more.

"The key areas of focus from an investor point of view are: the path to broadband and signing major (cable) relationships, progress and perspective on TWE (Time Warner Entertainment) and commitment to maintaining an investment grade credit rating," said Anthony Noto, analyst at Goldman Sachs.