TWX Fundamental Research Investment Analysis, Time Warner, Inc.

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Time Warner, Incorporated (TWX)

The Razor's Edge

2-Year Price History

Recent Price
(2/6/2009)
$9.63
52-Week Price
$7.00 - $16.90
Market Capitalization
$34.5 Billion
Dividend Yield
2.60%
Most Recent Dividend
$0.31

About Time Warner, Inc.

Time Warner, Incorporated is considered to operate in the Services sector. They specifically operate in the Entertainment - Diversified business segment contained within the Media industry.

A media and entertainment company, whose businesses include interactive services, cable systems, filmed entertainment, television networks and publishing.

Ockham's Rating

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TWX Revenue

For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at TWX through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 10 years are 1.86x and 1.04x respectively.

Utilizing this range we can see that TWX’s current Price to Sales per share ratio of 0.73x is significantly below its average levels historically. In fact, with a current price of $9.63, TWX is a full 50% below its average Price to Sales ratio at comparable sales levels. This is a rare occurrence and, when taken in context of the other areas of our analysis, can be a strong positive for our outlook for TWX.

TWX Cash Earnings

Looking at TWX specifically in their Cash Earnings capabilities, Ockham views TWX as significantly below its historical average multiple of cash earnings as calculated by Ockham. Similar to our analysis of sales per share, Ockham looks at the last 10 years of cash earnings levels for TWX to identify where the current high and low price levels have been historically in relation to profit per share. Again, we utilize a weighted average methodology which relies more heavily on recent years of data. This weighted average framework provides us with an average high Price to Cash Earnings ratio per share of 7.79 and a 4.34 low over the same period.

Now that TWX’s current price is $9.63 and its Price to Cash Earnings ratio is 1.08, we are very positive on its outlook from the cash earnings perspective. In fact, TWX is now trading a full 83% below its average historical Price to Cash Earnings ratio at these profit per share levels. When our clients ask us why TWX has great long term potential, the Cash Earnings levels to current stock is one of our primary reasons. But naturally, now we need for the overall market to recognize this disparity.

TWX Dividends

A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure of a company's inherent expectations.

Comparable to our analysis of Sales and Cash Earnings per share, we examine dividend yields from TWX against the historic high and low levels over an available data range. Because TWX has an established history of paying a dividend to shareholders, there is value in comparing recent dividends to historical dividends. In TWX’s case, the estimated annual dividend is $0.25 producing a current dividend yield of 2.60%. The highest dividend yield from TWX in recent history was 4.43% while the lowest dividend yield was 0.00%. If you are looking for some “bang for your buck” then a dividend yield of 17.38% above the historical median should be enticing. TWX receives a positive boost in our view because as you know, equity at its core is simply a claim on future dividends.

Peer Comparison

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Time Warner, Inc. Industry Grouping

(2/6/2009)
Company Ticker Market Cap (Ml) Latest
Price
Price/Cash Earnings Price/Sales 5-Yr. Rev.
Growth Rate
5-Yr.
Avg. ROE.
Current 10-Yr. Range* Current 10-Yr. Range*
Peer Company Averages (not incuding TWX) 8.64 4.94 » 240.10 2.14 0.96 » 6.75 16.79% 9.20%
*10 year range does not include current year values
Grupo Televisa S.A. GDR TV $41.2 Billion $14.39 23.26 8.60 » 1087.50 7.09 2.53 » 19.91 10.33% 16.06%
The Walt Disney Company DIS $36.1 Billion $19.45 5.75 7.95 » 39.28 0.98 1.04 » 3.65 6.94% 11.66%
Time Warner, Inc. TWX $34.5 Billion $9.63 1.08 0.80 » 146.65 0.73 0.53 » 23.14 2.56% 6.62%
Comcast Corp. CMCSA $29.2 Billion $14.17 4.22 2.91 » 48.17 1.15 0.81 » 6.75 19.92% 4.98%
Time Warner Cable, Inc. Shares A TWC $17.3 Billion $19.16 4.42 3.76 » 10.02 0.00 0.00 » 0.00 n/a 5.73%
Rogers Communications, Inc. Class B Non Voting. RCI $15.0 Billion $28.71 5.54 1.46 » 15.52 1.49 0.42 » 3.41 29.98% 7.56%
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RazorWire™ & Community Discussion

Fox Business Happy Hour
2/6/2009 5:44 PM
Fox Business Happy Hour
Not marvel. Semiconductor company. Names like hulk and d central florida. Comics. -- dc comes ex. Owned by TIME WARNER. Watch man film will be big one. Couple friends here guys. What is hottest segment on financial tv? >> "street meat". Eric: "street meat"!.
Power Lunch
2/6/2009 1:27 PM
Power Lunch
Take over. But uncertainty is clear in terms of the lack of synergy that's going on within news corp right now. It's falling into the TIME WARNER syndrome where there are great assets but no cohesion? >> mark, you like media stocks? I know you're not an expert but you do watch the media, don't
Cavuto
2/5/2009 6:31 PM
Cavuto
Employees of financial government funds. The provision would cut dividends and additional performance pay bonuses. Former TIME WARNER chairman, gerald 11, one time one of the highest paid executives.
Cavuto
2/5/2009 6:00 PM
Cavuto
Another problem, another delayed confirmation and for the president, another headache. Tax spent and now stimulus and for TIME WARNER boss jerry yang on whether it is open season on fat cat ceos and the retail expert says it's open season on retailers. Already hurting. And he says the hurt hasn't even started.
Street Signs
2/5/2009 2:25 PM
Street Signs
What do you see in there? >> clearly issues about weless and streaming broad band down the road. They are taking TIME WARNER cable and deleveraging. He'll have 11 billion of debt when the dust settles. Within three years, he'll have no debt if he does nothing. He has options and flexibility. TIME WARNER, selling at $9 and change, is an awfully intriguing idea. In terms of advertising, it's hurting. They have some subscription business and recurring revenue.
Countdown to the Closing Bell
2/4/2009 3:37 PM
Countdown to the Closing Bell
And in the opinion of colin so a lot of pressure, liz coming from all different sides and google trying to get in with TIME WARNER and telling it to spin off, but seems to be fewer and fewer suitors for that >> liz: that would make sense. What is everyone watching right now? >> as far as right now we're just watching the market and the
Countdown to the Closing Bell
2/4/2009 3:36 PM
Countdown to the Closing Bell
In a sticky and tricky situation with options back dating and a court settlement should put that to rest and shares are up 1.5% on that news and also, watch shares of google, as well as TIME WARNER, TIME WARNER not only releasing earnings today, but google sent a letter to TIME WARNER asking it to spin off its aol division, something it's completely entitled to do seeing that it holds a 5% stake in the who will scoop up aol, if and
Countdown to the Closing Bell
2/4/2009 3:34 PM
Countdown to the Closing Bell
Music giant able to manage everything from record, recorded music to ticket sales and another stock TIME WARNER shares are hurting after posting significant quarter losses on 25 billion dollars in write-downs and a forecast for 2009 profit to be flat with that of 2008. Falling to the tune of 31/2%.
Power Lunch
2/4/2009 1:02 PM
Power Lunch
These airplanes. Three of the seven given the controversy of executive perks. That's not all. These same people say they have corporate apartments, including one in TIME WARNER center and b of a will be divesting itself from one of those properties. B of a inherited merrill lynch's corporate helicopter which will be sold as well. This is part of an ongoing cost
The Opening Bell on Fox Business
2/4/2009 9:50 AM
The Opening Bell on Fox Business
About it, these are the two bohemoths getting together. And one learned it and one thing we learned it better. You see a lot of unwind. TIME WARNER cable being one, the news spun out of TIME WARNER so i'd love it see some competition alexis: yeah, you know, we were talking this morning, the bruce springsteen tickets are now-- I joys markopolos is about to
The Opening Bell on Fox Business
2/4/2009 9:32 AM
The Opening Bell on Fox Business
Job dave kansas. Alexis: nicole, we'll drill him about it in just a moment. Thanks so much. Shibani joshi is live at the nasdaq with the latest on early trading over there. Good morning, shibani. >> good morning, alexis, glum media earnings from TIME WARNER and disney are holding us back here a little at the start and also not helping things, profit warnings coming out of costco, certainly, going to be pressuring the markets,
Squawk On The Street
2/4/2009 9:17 AM
Squawk On The Street
18%. Operating down before amortization and depreciation, down 14%. Some estimates had been for so overall, you may not get too bad of a reaction to TIME WARNER's numbers. That guidance for this year seems to be more or less in line when you back back in the $250 million charge they're including. TIME WARNER cable is going to be spun off very soon from the it will be its own -- completely independent company, remember taking on $10 billion worth of that debt then going -- that money being transferred to time take a look at TIME WARNER because that call's going on right now. Here we'll see what happens. It will be interesting to watch. They had revenue generating units which is the metric they like us to watch.
Squawk On The Street
2/4/2009 9:17 AM
Squawk On The Street
That's right around in line. As for the fourth quarter ju can see it there. Cable networks were strong. Studio was strong. They did take a lot of write they always seem to at TIME WARNER for cable, publishing and aol, the deal that just won't stop giving, losses. Aol's subscription revenue down that's part of the strategy.
Squawk On The Street
2/4/2009 9:16 AM
Squawk On The Street
Media stocks lately not much to say, certainly not much good to say about the group as it suffers mightily multiple falling into the single digits. But this morning we did get earnings from TIME WARNER, the disney result last night. Take a look at how TIME WARNER is looking this morning. It is down. Not too bad. Of course, huge spin-off of cable coming for TIME WARNER. As for the quarterly report, let's start off sort of talking about 2009 where they're now estimating they'll earn 66 cents a share.
Squawk On The Street
2/4/2009 9:12 AM
Squawk On The Street
Being announced for this >> thank you, louisa. Up next, the faber report. David talksmedia. Disappointing quarterly results, TIME WARNER and disney. >> word on the street and the buzz from beyond. The house is digging into the scam of the century. Mark, what is that?
The Opening Bell on Fox Business
2/4/2009 9:00 AM
The Opening Bell on Fox Business
Concerns about pitching costs and concerns about the the stronger bol hurting overseas sales as they turn the currencies into dollars. TIME WARNER face ago slumping ad market in the states. Sales market for the fourth quarter profit and revenue missing estimates there, report ago 16 billion dollar fourth quarter loss after write-offs. Forecasts for 2009 predicting an unchanged profit year from last they're also spinning off their TIME WARNER cable unit, those estimates excluding that, already announced 1500 job cuts by the way at warner brothers and aol. Walt disney reporting after the close last night, shares tumbling this morning,
Squawk Box
2/4/2009 7:52 AM
Squawk Box
Profit below expectation because january same-store sales were flat. >> same-store sales down 2%. >> u.S. Was flat. Yeah. But same-store down. So that's down sharply this TIME WARNER. Let's see what's happening someone factored everything out and got to 23 cents. That was still a couple of pennies below expectation. Revenue was below. And then '09 earnings per share
Money For Breakfast
2/4/2009 7:48 AM
Money For Breakfast
>> it's the word talk. They're all talking and it's really a matter of show and they have to do something drastic, and something important to show shareholders and wall street in general that we're on your right now TIME WARNER has had a pretty bad reputation as far as investors go. People felt betrayed by TIME WARNER, great assets, great it is a matter now of showing what you've got at this point. Alexis: yeah, for you that's selling aol. >> sell aol . Alexis: he wants it out!
Money For Breakfast
2/4/2009 7:47 AM
Money For Breakfast
You'll see them start to deploy the different once the cable deal is done, they'll start to make alexis: john, you wrote that you are mystified about the good reputation of the former TIME WARNER chief dick parsons, that he's enjoying right now. And you've had some tough opinions as well for what bewkes needs to do to turn this place around. Tell me why? Does it fall into the hands of the igers of the world,
Money For Breakfast
2/4/2009 7:44 AM
Money For Breakfast
Here to break. Who really is going to buy this property? >> it has customers, it has cash flow. There are companies out there, biocompanies perhaps, auto tech companies that might want to buy it has TIME WARNER has not made use of those so far. Alexis: damien, does anybody have the money, the credit to go out there and buy it now? >> there is one catalyst that would help, liquidity in the
Money For Breakfast
2/4/2009 7:44 AM
Money For Breakfast
Over their head and try to wake up some time in the second half of '09. Alexis: guys, look, bewkes is trying to do something here. He's trying to turn this company around. He's talked about selling the aol unit, some suggest you saw the TIME WARNER cable unit. But, john, so far the jury is still very much out and he's doing a restructuring, but not seeing it really reflected in the stock price. >> sell aol. Sell aol.
Money For Breakfast
2/4/2009 7:42 AM
Money For Breakfast
Bob iger said we're facing "likely to be the weakest economy in our lifetime." after his company saw its net income fall 32% for fiscal first quarter, and the news that rival TIME WARNER this morning is no better, the parent company of aol, warner brothers and cnn, reporting earnings this morning per share of 23 cents excluding that was versus the street estimate of 26 cents. As we speak, TIME WARNER is down 3%, disney down 7.8%. >>> here now with more on the future of TIME WARNER is jon friedman of marketwatch and damien with ht capital. >> good morning. Alexis: damien, you had an
Money For Breakfast
2/4/2009 7:40 AM
Money For Breakfast
Thank you very much for joining us this morning. >> thanks, appreciate it. Thanks a lot. Alexis: coming up, stimulus showdown on the hill. Charles payne tells us what president obama needs to do with the pork. And TIME WARNER out with fourth quarter earnings this and it wasn't pretty. We're going to look at the future of the media company when "money for breakfast"
Money For Breakfast
2/4/2009 7:02 AM
Money For Breakfast
Revenue the analysts were looking for. Kft keep an eye on those below forecast earnings. >>> another one that came in a little while ago we watch quite closely is TIME WARNER. TIME WARNER's profit was 3 cents shy of analyst once you exclude certain items, complicated accounting in terms of charges involved, but 23 cents a share ex items, 26 cents a share was the estimate. Revenue also a little bit light at TIME WARNER, alexis. Those are your three market back over to you now. Alexis: thank you so much. President obama expressed outrage last week of reports of wall street bonuses promising new rules to clamp
Squawk Box
2/4/2009 6:59 AM
Squawk Box
Right now, we're up 69 cents. Some of the stories we're following. TIME WARNER had 23 cents a share ex ex-ooiment ex-items. Republicans have voted to strip the bill of a tax break that focused on hollywood movie stud
Squawk Box
2/4/2009 6:07 AM
Squawk Box
Where was icahn? >> wait a minute, a special meeting of stock -- did we know about this reserve ratio? >> that's after they complete the TIME WARNER cable separation, right? >> at its discretion, yeah. >> it says -- I mean, it's a $9 when you separate out cable from the other atses, who knows
Squawk Box
2/4/2009 6:01 AM
Squawk Box
That's designed to try and make these executives think longer term about their decisions. They don't want them to think on a quarter-to-quarter basis. >> TIME WARNER, 4.47 is the loss that's being reported on -- and that's $16 billion. Obviously there's something in there because the estimate was for a profit of 26 cents. The revenue number is shy at
Power Lunch
2/3/2009 1:46 PM
Power Lunch
Can say the recession's having an impact. But when you step back and say at these prices, when you look at TIME WARNER at 9.49 or disney, just like home sales, now that there are low mortgage rates and prices are down, people are going to buy. These are assets that can't be duplicated. When you have strong management
Power Lunch
2/3/2009 1:45 PM
Power Lunch
And I think long term, he's done a great job with moving into pixar and moving the studio along. >> tuna, speaking of TIME WARNER, give your plug, baby. Like that stock? >> we're neutral on TIME WARNER. We expect them to do some heavy I think that you've seen the preannouncement from TIME WARNER regarding $25 billion fourth quarter. That news is already out there. You should think investors are focused on the outlook for 2009,
Power Lunch
2/3/2009 1:44 PM
Power Lunch
Jerry levin, rhymes with "fin" isn't disney one of the best collections of media assets >> I like TIME WARNER and you have to take a longer-term the theme parks, of course they've hurt during this recession. Eventually, people will take their kids to disneyworld and disneyland.
Power Lunch
2/3/2009 1:27 PM
Power Lunch
That's the way I would look at it. And at the same time, i'd rather be in magazines than newspapers right now. And I think we've got stability of management at TIME WARNER. Obviously across the board. The same group that's been at hbo and at the magazines. To break it up is appealing to
Power Lunch
2/3/2009 1:26 PM
Power Lunch
Obviously in jeff bucchus, a manager with a programming background. He came out of hbo, one of my favorite companies. He'll do good things with the balance sheet and get quite a dividend from TIME WARNER cable. He's emphasizing content. You know, warner brothers had a
Power Lunch
2/3/2009 1:24 PM
Power Lunch
The changes in behavioral patterns by consumers and the way they take in media. What for you -- who has -- special I know you're probably going to say TIME WARNER. You're still waving the flag, I can tell. Who has among the best business models out there now, do you >> disney this afternoon, time
Power Lunch
2/3/2009 1:20 PM
Power Lunch
>> very interest insights there. That's why we brought you along, good stuff. We'll be back with some more. Still looking ahead to the earnings reports from disney and TIME WARNER. His insights on that as well. >> following the move on the interest rates future and the dow jones, which is steady as she goes. A lot of action in the other
Power Lunch
2/3/2009 1:19 PM
Power Lunch
But what's going on in society while there is obviously some fire in that smoke, it's an >> did you do that enough when you were ceo and things were falling apart at aol/TIME WARNER? >> I don't think I did enough, because I don't think I was open enough to understand that I didn't have all the answers. You know, frankly, after a
Power Lunch
2/3/2009 1:13 PM
Power Lunch
Currencies with rate cuts in addition to that, the gold market down ten bucks on the keeping you up-to-date on the >> waiting for disney's earnings later and TIME WARNER tomorrow we'll talk about that later. We welcome back gerald levin, the former ceo of TIME WARNER with us in los angeles today. Dennis? >> these days, you are the presiding director of the moon sanctuary in california which offers people in supportive
Power Lunch
2/3/2009 1:01 PM
Power Lunch
The media business. We'll be talking later about some of the earnings to come. Just in general with this horrible economy and so forth. Would you want to be running a media company right now? >> well, certainly TIME WARNER, that's for sure. You know, i'm an optimist by nature. And just as an example, if you look at the movie business over
Power Lunch
2/3/2009 1:01 PM
Power Lunch
We're real happy. >> listen, gang, we always have a guest who stays with us. We call them the "power player." say hello to gerald levin, the former ceo of TIME WARNER. Out in los angeles and runs the welcome, we hope you're well. Thanks for joining us today. >> thank you, bill. Great to be with you again. >> we've got a number of things
The Call
2/3/2009 11:47 AM
The Call
What do you look for to tell you it's time for to you get back into this stock market if you haven't already done so? Send us your e-mail thoughts, the former ceo of TIME WARNER is with us today as we get ready for disney and TIME WARNER to announce their latest earnings. We'll get you set up for that when we see you at the top of the hour on "power lunch." >>> up next, barney frank outlining his 2009 agenda this
The Opening Bell on Fox Business
2/3/2009 9:31 AM
The Opening Bell on Fox Business
It harder to do the rohm & haas deal. After cher daniels andmerck up 3 and 5% respectively. TIME WARNER, some of the other names to watch as well. And upgrade. Bj whole sales, mattel one day later, and also, very interesting coverage initiated
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Key Fundamentals

TWX - Time Warner, Incorporated Fundamentals
Price (2/6/2009) $9.63
Volume (2/6/2009) 23.3 Million
10 Day Average Volume 24.6 Million
13 Week Price Range $7.00 - $11.15
52 Week Price Range $7.00 - $16.90
LTM Revenue $47.0 Billion
 
Shares Outstanding (12/2008) 3.6 Billion
Market Capitalization $34.5 Billion
Shares Held By Institutions 3.0 Billion
Institutional Holders 1,114
% Shares Held By Institutions 83%
Earnings Per Share (EPS) ($3.74)
P/E Ratio n/a
Book Value Per Share $16.71
 
Gross Margin 61.70%
Quarterly Dividend 0.25
Dividend Yield 2.60%
Beta 1.29
Fiscal Year Ends December