Earnings: Time Warner | Burger King | Marsh & McLennan

Time Warner Profit Rises Sharply In Third Quarter

NEW YORK - (AP) - Time Warner Inc. (TWX), the world's largest media conglomerate, posted sharply higher third-quarter earnings on Wednesday due largely to several asset sales and adjustments related to its deal to acquire cable systems from Adelphia.

The company's AOL unit, which is revamping its business model, posted higher profits as it slashed marketing expenses for its dial-up access service. But AOL's revenues fell as lower revenues from dial-up subscribers outpaced gains in Internet advertising.

The New York-based company, which owns Time Inc., Warner Bros. and HBO, had net earnings of $2.3 billion, or 57 cents a share, versus $853 million, or 18 cents a share, in the year quarter last year.

Revenues rose 7 percent to $10.9 billion from $10.2 billion.

The latest results included 23 cents per share in discontinued operations related to cable systems that Time Warner has since transferred to Comcast Corp. as part of a three-way deal with Comcast to acquire the systems of Adelphia Communications Corp.

The figures also included 14 cents per share in gains from the sale of Warner Bros.' Australian theme park business, other asset sales and one-time effects.

Without the discontinued operations or one-time gains, the earnings were equivalent to 19 cents per share, up from 17 cents per share on a comparable basis in the year-ago period.

Analysts polled by Thomson Financial had been expecting earnings of 20 cents per share.

On an operating basis — before interest expenses, taxes, depreciation and amortization — Time Warner's income grew 16 percent to $2.9 billion, led by gains at its cable TV business and at AOL. The company's cable networks and magazine publishing divisions also posted gains, while TV and movie programming declined.

The company's shares fell 21 cents in pre-market trading to $19.80. The shares have been rising steadily since their $15.84 close on August 9, shortly after the company announced its new strategy for AOL. Longer term, the shares have been trading below $20 since May of 2002.

AOL posted a 21 percent gain in profits despite a 3 percent decline in revenues as the division cut back on marketing expenses for its dial-up Internet access business, which continued to dwindle rapidly.

AOL is in the midst of turning its business model away from charging for Internet access in favor of selling advertising online, a formula being followed successfully by Internet rivals Yahoo Inc. (YHOO) and Google Inc. (GOOG).

AOL lost another 2.5 million dial-up subscribers in the quarter, bringing its total to 15.2 million. Subscription revenues fell 13 percent to $210 million while advertising revenues jumped 46 percent, to $151 million.

This summer AOL said it would offer many of its services for free, including e-mail, as part of its business overhaul.

For the first nine months of the year, Time Warner earned $4.8 billion, or $1.13 per share, versus $1.4 billion, or 29 cents per share, in the comparable period last year. Nine-month revenues rose 2.8 percent to $31.8 billion.

The company also backed its previously announced full-year outlook of posting growth in operating income in the low double-digit percentage range, excluding the impact of the Adelphia transaction and other one-time effects.

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Burger King Earnings Jump 82 Percent

MIAMI - (AP) - Burger King Holdings Inc. (BKC), the world's second-largest burger chain, on Wednesday said fiscal first-quarter earnings jumped 82 percent, due to North American growth driven by sales of Value Menu items and the Stacker sandwich.

Quarterly earnings totaled $40 million, or 30 cents per share, for the three months ended Sept. 30 from $22 million, or 19 cents per share, during the year ago period. Excluding costs related to management fees, franchise system distress and the tax effects of unusual items, net income was 26 cents per share in the latest period.

Revenue rose 8 percent to $546 million from $508 million last year.

Analysts polled by Thomson Financial expected a profit of 26 cents per share on revenue of $538.1 million.

Same-store sales, or sales in stores open at least one year, a widely used industry gauge of performance, grew 2.6 percent in North America and 2.4 percent worldwide.

North America sales were driven by the BK Stacker and BK Value Menu items. Premium products drove sales in Latin America and Europe.

For the fiscal year, the company expects revenue growth between 6 percent and 7 percent and adjusted earnings growth bewteen 10 percent and 12 percent.

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Marsh & McLennan Earnings More Than Doubled

NEW YORK (Reuters) - Marsh & McLennan Cos. Inc. (MMC), the world's largest insurance broker by revenue, said on Wednesday third quarter earnings more than doubled, beating estimates, helped by cost-cutting efforts.

The earnings improvement could take investor pressure off Chief Executive Michael Cherkasky, who has been struggling to restructure the company after its 2005 settlement of charges that it had rigged bids and steered business to insurers that paid hidden fees.

Marsh & McLennan said earnings were $176 million or 31 cents a share, up from $69 million or 12 cents a share in the year earlier quarter.

Excluding one-off items, the broker had earnings of 38 cents a share, beating analysts' average estimate of 36 cents a share, according to Reuters estimates.

Since the start of the year, Marsh shares have fallen 7.3 percent compared to a gain of 3.7 percent in the Standard & Poor's insurance index.

Its shares hit a year low of $24.20 in August and have since risen on reports that private equity firms, possibly backed by rival Willis Group Holdings Ltd. (WSH) would try to take the company private.

While Cherkasky has denied any plans for a sale, the cost of protecting MMC debt against default in the credit derivatives market has more than doubled in the past three months on speculation about a leveraged buyout.

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