Q. My Time Warner Inc. shares haven't fared well. Are things getting even worse? -- R.D., via the Internet
A. The bright side is that about three-fourths of the international media and entertainment conglomerate's revenue is derived from content sales and subscriptions.
Over the decades, economic trauma has had little effect on those areas.
The dark side, however, is that the remaining one-fourth of revenue comes from advertising, which has definitely been hurt by the economy.
Still struggling because of its merger with AOL and the inability of its various divisions to collaborate effectively, Time Warner is increasingly focusing on content such as films and magazines, rather than on delivery.
By year-end it intends to spin off Time Warner Cable, the nation's No. 2 cable company, from which it will receive a $9.25 billion dividend payment.
It plans to split AOL's dial-up Internet and advertising businesses into separate divisions by early next year, enabling the sale or merger of either business. There reportedly have been talks to combine the AOL advertising business with either Yahoo Inc. or Microsoft Corp., while EarthLink Inc. and Liberty Media Corp. have expressed interest in the dial-up business.
Shares of Time Warner (TWX) are down 18 percent this year following last year's 24 percent decline. Second-quarter net income fell 26 percent on declining AOL subscriber fees and lower Time publishing advertising revenues.
Google Inc. recently said its 5 percent stake in AOL, purchased in 2005 for $1 billion, "may be impaired," meaning its value is reduced.
Consensus rating on Time Warner stock is "buy," according to Thomson Financial, consisting of six "strong buys," 10 "buys" and six "holds."
This company, responsible for the successful "The Dark Knight" film, now wants its movie studio to release as many as eight such big-budget movies a year by 2011, with superheroes a high priority.
But some of its other recent films, such as "Speed Racer" and "Get Smart," did not meet expectations. It closed its Picturehouse and Warner Independent Pictures art-house labels and intends to reduce its overall releases to about 20 a year from the current 26.
Earnings are expected to rise 13 percent this year and 8 percent next year. The five-year annualized earnings projection of 13 percent is in line with the expectation for the diversified entertainment industry.
Q. Is Janus Orion Fund worth investing in? -- V.M., via the Internet
A. Orion has potential. It hunts not only for traditional growth firms but also promising companies that have stumbled.