TW, AOL Stocks Jolt Ahead

Time Warner Inc.'s battered stock reversed its down-ward spiral last week on news that it beat Wall Street's profit expectations. The good news also bumped up America Online Inc.'s sagging shares.

But analysts attributed the slump reversal more to arbitrageurs - traders who typically pounce on merging companies' stocks - than to the importance of Time Warner's numbers at this stage of the merger.

"The earnings of Time Warner are not quite an after-thought but are not the most important factor in the future of the combined company at this early state," said Burnham Securities media analyst David Leibowitz "The numbers will be thoroughly gone over once a deal is in fact in place."

Cooling off After the rush of enthusiasm from the announcement of the biggest corporate deal of all time faded, investors became cool to the $150 billion marriage and sent stocks of AOL and Time Warner down as much as 13.7% and 9.4%, respectively.

While there is no collar on the merger agreement - or any other type of escape clause for either party - analysts said that since AOL shares are being traded for Time Warner's shares, the latter's sshareholders may not b inclined to vote in favor ... // 69% Remaining