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Time Warner Looking Good in Vain

W.D. Crotty
February 1, 2006

Motley Fool Stock Advisor recommendation and entertainment giant Time Warner (NYSE: TWX  ) reported solid fourth-quarter results Tuesday. Revenue climbed 7% over the comparable year-ago quarter, while operating income rose 37%.

Double-digit increases to adjusted operating income came from the networks, filmed entertainment, and cable and publishing divisions -- that's everyone except AOL, and even AOL managed an increase of 4.9%. So, overall, business was looking good.

To discuss Time Warner, it helps to look at a five-year chart. Since early 2002, the stock has not traded above $20 a share, and it was hovering at $18.08 (up 4%) in late-afternoon trading Tuesday. That year, the bottom line showed a $98.7 billion loss. A lot has changed since then. For 2005, the company reports it had free cash flow of $4.4 billion (that's $0.94 a share).</