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Analysts expect high earnings report from AOL

Coming on the heels of its proposed merger with Time Warner, America Online will report quarterly earnings, which analysts expect will be bolstered by stronger advertising and e-commerce revenues.

Coming on the heels of its proposed merger with media giant Time Warner, America Online today will report quarterly earnings, which analysts expect will be bolstered by stronger advertising and e-commerce revenues.

Wall Street expects the online giant to report quarterly earnings of 8 cents a share, according to First Call consensus estimates. That's up from the 4 cents a share earnings reported during the same period a year ago.

Analysts will be looking out for common figures, such as subscriber growth, development of its international operations, and especially its advertising and e-commerce revenues. AOL has emphasized its desire to depend less heavily on subscription revenues and focus more on beefing up its advertising and e-commerce dollars.

"We will focus a lot on the commerce opportunity and how much has been transacted throughout AOL's service," John Segrich, an analyst at CIBC Oppenheimer, said in an interview. "This will be the biggest area to show upside."

But aside from the standard earnings items, analysts expect AOL executives will address the planned merger with Time Warner.

AOL last week stunned the world when it announced its intention to acquire Time Warner for $160 billion, according to that day's trading price. The deal combines the largest online service--with over 20 million subscribers--with the largest media and entertainment company, which owns notable properties such as CNN, Warner Bros., Time magazine and high-speed Internet service provider Road Runner.

The merger announcement sent Time Warner's stock soaring. However, AOL's stock valuation You've got 
Time Warner has dipped since the announcement, primarily because of concerns that its soaring share price will taper off with the slower-growing Time Warner under its wing.

Nonetheless, Wall Street hopes AOL executives will more clearly outline their plans for how the companies will integrate.

"Rather than the numbers, which we expect to be good, we expect the real take-away from the earnings will be the guidance going forward with regard to the potential near-term synergies of the proposed merger between AOL and Time Warner," Jim Preissler, an analyst at PaineWebber, wrote in an analyst note today.