Charge, $1.8B Loss Cloud AOL's 1Q

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Revenue and cash flow growth at AOL Time Warner Inc. was in line with
expectations in the fourth quarter, but the media giant told analysts in a
conference call that a planned first-quarter-2002 charge for goodwill could be
as much as $50 billion.

That revelation, coupled with a higher-than-expected net loss of $1.8
billion, helped to drive down AOL Time Warner's stock $2.70 per share to $24
each earlier Wednesday. The stock rallied late in the day to close at $26.42,
down 28 cents per share.

On Jan. 7, AOL said it would take a charge of between $40 billion and $60
billion for goodwill stemming from the merger between America Online Inc. and
Time Warner Inc. in January 2000. The charge is being taken to comply with new
federal accounting rules.

In the conference call, AOL Time Warner chief financial officer Wayne Pace
said the charge would likely be in the middle of that range.

For the fourth quarter, cash flow was up 14 percent to $2.8 billion and
revenue grew 4 percent to $10.6 billion, largely due to performance in the
company's cable operations.

At the cable operations, cash flow rose 12.5 percent to $863 million from
$767 million, while at its networks, cash flow was up 2.5 percent to $454
million from $443 million in the same period last year.

CEO-elect Dick Parsons also hinted that AOL Time Warner is still in the hunt
for cable systems after losing out on the bidding for AT&T Broadband.

'We don't believe consolidation stops with that transaction,' he said. 'We
are net, net, net an acquirer.'

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