A Big Upgrade for Time Warner

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After lumbering along at a lowly two-star rank for most of the past year, enough top-performing CAPS members have turned bullish on Time Warner (NYSE: TWX  ) recently to upgrade it to three stars. A total of 1,226 members have given their opinion on Time Warner, with many of them offering analysis and commentary explaining the recent optimism.

Many investors are looking forward to life after AOL for Time Warner -- the company will complete its long-awaited spinoff next month, further slimming down after its Time Warner Cable spinoff. AOL has been a drag on earnings for years and the company has continued to lose subscribers. Its ad revenue from its Google (Nasdaq: GOOG  ) partnership has been falling, as its search business lags distant competitors like Yahoo! (Nasdaq: YHOO  ) and Microsoft (Nasdaq: MSFT  ) .

Time Warner plans to focus on reviving its publishing businesses and growing its film and cable-TV businesses. Some CAPS members believe these segments have good potential -- the strength it's seen in its cable networks and Warner Bros. movie studio, in addition to cost cutting measures, already prompted it to raise its full-year earnings guidance. Warner Bros. has some of the top box office hits going up against other productions from Walt Disney (NYSE: DIS  ) , General Electric's (NYSE: GE  ) Universal Pictures, and Sony (NYSE: SNE  ) Pictures, and the company has the No. 1 share of the home video business worldwide. An eventual economic turnaround could help reverse its declining TV-ad sales for its cable channels, which have been building their lineup. Time Warner has also been able to generate consistent free cash flow and plans to maintain its dividend after the AOL spinoff.

Do you think Time Warner deserves its raised status? Add your thoughts in the comments box below on this page, or head over to CAPS to rate the company and check out all the information and opinions the community offers, absolutely free.