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Time Warner Builds on Box Office Success

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Ticket sales and AOL spinoff may help media giant.

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Minyan Morning Memo

One to Watch: Time Warner (TWX) today reported Q2 earnings which exceeded estimates even as its revenue fell short.

The media conglomerate benefited from cost cuts, strength in cable and a gold mine on the silver screen. I Love You, Beth Cooper is a box office bomb for Fox but audiences are infatuated with Bradley Cooper's star turn in The Hangover, which cost Warner Brothers $35 million to make and is closing in on a $250 million take. Mr. Potter will be a huge additional benefit to the bottom line in upcoming quarters, though the trouble with Harry is his end is nigh. Other concerns include a weak ad market and punitive publishing environment. Still, with the spin off AOL expected by year end, things could be looking up.

What Just Happened: Better performance from the banks allied to a late day rally failed to prevent a Dow decline, though the Nasdaq was up again yesterday. Faced with a record breaking 12th consecutive gain, over in England the FTSE got cold feet and fell. And, mindful every shrink in America takes August off, Psychiatric Solutions (PSYS) chose Tuesday to announce Q2 earnings which beat the Street.

What's Happening: Asia ended largely lower as, in a Shanghai surprise, China posted its biggest decline of '09 despite debuting the biggest IPO on earth all year. Europe is going green with markets up across the continent on impressive earnings. Here at home, futures are falling as quarterly company results and renewed macro worries give investors indigestion. And a recent uptick in deal making continued this morning when Microsoft (MSFT) found a search partner in Yahoo (YHOO). The ten year licensing deal, struck as signs of trouble in paradise emerge between Google (GOOG) and Apple (AAPL), may make sense though it does lack the headline grabbing quality of a mooted tech marriage of yesteryear. Back in Benjamin Netanyahu's first term as Israel's Prime Minister the joke was that Netscape and Yahoo were merging, forming NetandYahoo.

What Will Happen: In economics, at 8:30 AM Eastern we got a much steeper than expected decline in June durable goods, expensive items built to last. (Think the Hilton in Paris, as opposed to Paris Hilton.) Oil inventories are out at 10:30 and the Fed's regional "beige-book" survey is due at 2:00 PM. On the corporate front, expect earnings from Aflac (AFL), ArcelorMittal (MT), Bayer, ConocoPhillips (COP), Digital River (DRIV), Express Scripts (ESRX), Fiserv (FISV), General Dynamics (GD), Green Mountain Coffee (GMCR), Hess (HES), Honda (HMC), Medco (MHS), Moody's (MCO), O'Reilly Automotive, Praxair (PX), Royal Caribbean (RCL), SAP AG (SAP), Visa (V) and WellPoint (WLP).

Happenstance: Proof it always pays to proofread. One dodgy digit may force a blue blood law firm to bleed $100 million of red ink. An error which must make them sic, so to speak.
No positions in stocks mentioned.
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