AOL (AOL) affirmed its company wide target for sales and earnings before interest, taxes, depreciation and amortization -- a cash-flow measure often employed by media companies -- for the parent for 2002, but cautioned it now sees EBITDA at "the low end" of its previously provided range of 5 percent to 9 percent for 2002.

AOL updated its outlook for the online division ahead of an "AOL Day" meeting with analysts and the media. Chief Executive Richard Parsons opened the meeting by declaring, "This is not a wasting business." Hear Parsons' introductory remarks.

The company said it sees revenue in its online AOL unit "essentially flat" in 2003 with 2002 sales. It expects steep drops in advertising and e-commerce revenue, offset by growth in subscription revenue.

AOL forecast 2003 EBITDA for its America Online division to decline 15 to 25 percent from expected 2002 levels.

For America Online, revenue for 2002 is expected to be $8.8 billion to $9 billion, and EBITDA is estimated to be $1.7 billion to $1.8 billion. For the overall company, AOL said it anticipates 2002 revenue growth of 5 to 8 percent -- in line with analysts' forecasts.

AOL shares fell as much as $2.07 to $14.50 on the news, their lowest level since Oct. 30.

AOL Day

The meeting marks a bold step for AOL Time Warner in investor relations. Hundreds of investors, analysts and reporters were on hand for the company's self-described AOL Day in midtown Manhattan, the first such event since the January 2001 merger that created AOL Time Warner.

Jon Miller, the new chief of the America Online unit, presided over the meeting. Don Logan, a veteran Time Inc. executive who was recently installed to help oversee the giant's media "content" businesses, also played a role at the event.

Executives were expected to discuss the strides they believe America Online has made recently in picking up new customers. They may address persistent market rumors that AOL will move much, or all, of the editorial content on the Web sites of such AOL-owned magazines as Time, Fortune, Entertainment Weekly, People and Sports Illustrated to America Online as a way to boost traffic on the site.

Strategy

Investors are eager to hear AOL's strategy.

"For the stock to work beyond the $15 to $16 level, the company must demonstrate a clear and convincing plan," said Michael Gallant, a media industry analyst with CIBC World Markets.

Speculation has also built that America Online will soon adopt a cable-television-style billing policy, meaning customers would pay for each service they seek, rather than AOL's current flat fee.

Investors and analysts, of course, are not completely in the dark. Chief Executive Richard Parsons effectively summarized his company's strategy in a Nov. 22 talk. Parsons, speaking at a Variety conference, said, "We're a content company," implying that the company's success would hinge on its ability to cross-market Time Warner magazine, movie, music, book and television material.