AOL Time Warner Inc. said on Friday it agreed to sell its CD and DVD manufacturing business to a Canadian company for $1.05 billion and would use the proceeds to trim its $26 billion debt load.
Under pressure from Wall Street, AOL Time Warner AOL.N has pledged to cut its debt to $20 billion by the end of 2004 and has been pursuing a number of deals, including the sale of its sports teams and a possible joint venture between its recorded music business and Bertelsmann AG's BERT.UL BMG. With these moves in the works and expectations for stronger quarterly earnings, some on Wall Street say the tide may be turning for the world's largest media company, which has been dogged for the past two years by slowing growth in its Internet business and government probes into its accounting.
"In this market, sentiment has its impact," said Paul Kim, an analyst at investment research firm Kim & Company. "(The deal) is another step in the right direction in the turnaround for AOL Time Warner, and it is just a prelude to a potential music merger, which would be another step in the right direction." Fahnestock analyst Peter Mirsky also said the sale of the CD and DVD manufacturing business to Cinram International Inc. CRW.TO , a Toronto-based maker of those products, is a positive move.
"They have this sale, the (pending) sale of their two Atlanta sports teams, and the joint venture -- on top of earnings where people expect the numbers to go up," he added. Standard & Poor's debt analyst Heather Goodchild said the agency plans to affirm AOL Time Warner's ratings and remove the company from CreditWatch after completion of the DVD/CD sale. Currently, S&P has had a "BBB+" corporate credit rating on AOL Time Warner, which remains on CreditWatch with negative implications.
News source: Reuters
-1 Comments - Add comment