AOL Time Warner said last night it would restate two years of results - cutting $190 million in revenues - due to accounting problems at its embattled America Online division.
The restatement will cut the company's revenue by a total of $190 million and earnings before various items by $97 million, AOL Time Warner said. It will also cut America Online's already weak advertisig and commerce revenues by $168 million over the two-year period.
Investors and analysts were surprised by the restatement but welcomed the company's speedy action only months after the world's largest media company started an internal review into its online unit's accounting practices.
The review started just weeks after the US Securities and Exchange Commission and Justice Department began their own inquiries. In July, the company had said it may have improperly accounted for advertising deals at America Online totaling $49 million.
"The stock is up because they didn't have to reduce guidance and they provided a little bit of assurance about the scope of impropriety," said one analyst.
The company reported earnings of $2.2 billion in the third quarter, down one per cent on last year.