The Day Ahead: AOL Time Warner's $1tn dream
Commentary: AOL Time Warner chairman Steve Case has never been known for understatement. That's why he was only half-joking that AOL Time Warner could be a company with $100bn in revenue and a $1tn market capitalisation.
The $1tn market cap is what Case reckons would make AOL Time Warner the world's most valuable company. Maybe Case was smoking too much synergy Wednesday at the company's first investor day. Maybe he's just delusional to think a media company could be worth $1tn (you could combine every media company in the world and not get to $1tn). At least, Case had enough sense to not set a deadline.
As for the $100bn in revenue target, AOL could be well on its way by the end of the decade. Officials reiterated projections that the company will post revenue of $40bn and earnings before interest, taxes, depreciation and amortisation of $11bn in 2001 despite a soft first quarter.
"AOL Time Warner has unparalleled consumer relationships and multiple ways to monetise them," said AOL Time Warner's Bob Pittman, co-chief operating officer. Pittman also indicated that AOL Time Warner wants more than just the media pie -- it plans to garner a big chunk of total consumer spending.
So how will AOL Time Warner become that $1tn company? We came up with a few scenarios:
Likely
- Go on a spending spree: AOL Time Warner said it would have $50 billion in available resources to acquire companies over the next three years. Some of that money will be invested in new technologies, but most of it will go to acquisitions. Give AOL Time Warner a year to produce those proposed synergies and the media giant could go shopping.
Less likely
- Buy AT&T Broadband: Once Ma Bell finishes its massive break-up plan, AT&T Broadband, the cable unit, will be independent. AOL Time Warner's second biggest jewel behind AOL is its cable network. An acquisition of a major cable operator would lock up the market.
Slightly ahead of our time
- Buy Canada: The country's vast resources could surely be leveraged through AOL Time Warner's assets. AOL Time Warner's motto could be: We're more than a media company, we're a country!
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