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Tuesday, August 22, 2006

The Bets Against Time Warner Fall

Stocks: (TWX)

Someone on Wall St thinks Carl Icahn will have his way at Time Warner, or, that the company is about to get its act together and begin to show revenue increases (or, more likely, cost cuts) that will improve the company's fortune.

Short interest in the big media conglomerate dropped 10 million shares to 47 million.

Short interest in Time Warner exiting the market may believe that Carl Icahn will have some success in a second assult at TWX by either replacing management or breaking the company up. This would probably involve getting rid of the units like AOL, the company's studio operation, and Time, Inc., the magazine group.

On the other hand, investors may believe that the radical restructuring of AOL into an advertising supported internet entity may show early signs of success. If so, the company's stock could rise.

Another alternative is that, pressured by investors, Time Warner makes futher, huge cuts to operating costs, especially staff at the studio and magazine groups.

Whatever the reasons, someone thinks the shares of TWX are not going to keep falling.

Douglas A. McIntyre can be reached at He does not own shares in companies that he writes about.

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