AOL Time Warner on Monday said 2001 earnings will come in well below its previous financial forecasts, and it gave lowered estimates for 2002. The media giant said EBITDA (earnings before interest, taxes, depreciation and amortisation) will grow 18 percent to $10bn (£7bn) for 2001, lower than previous EBITDA expectations of $11bn. In addition, the company said revenue will grow 5 percent to more than $38bn--lower than its projected $40bn for last year. In 2002, AOL Time Warner does not expect any help from a struggling economy. The company said it expects revenue growth to be in the 5 percent to 8 percent range and EBITDA to increase between 8 percent and 12 percent. Revenue will be flat for the first quarter of 2002. Monday's announcements were based on economic factors, AOL Time Warner's planned purchase of European magazine publisher IPC Media, and its acquisition of Bertelsmann's remaining 49 percent stake in AOL Europe. AOL Time Warner said it will acquire 80 percent of the AOL Europe stake for $5.3bn in cash on 31 January. The company expects to acquire the remaining 20 percent for $1.45bn in cash in July. Co-chief operating officer Richard Parsons, who will replace Gerald Levin as chief executive of AOL Time Warner in May, made his first public statements in his incoming role. Parsons emphasised the company's intent to focus on investing in new businesses such as interactive TV, video-on-demand and online music in light of the economic slowdown. Nevertheless, the company significantly lowered the bar on financial expectations. Advertising and commerce, which is expected to post a 13 percent decline in the fourth quarter of 2001, was the biggest drag on earnings for the year. Revenue and EBITDA for the first two quarters of 2002 are expected be flat. For 2003 and beyond, the company said its long-term outlook will be based on the performance of 2002. Parsons added that a strong 2002 could lead to EBITDA growth in the low- to high- teens in 2003 and beyond. "Our assumptions will be more conservative," Parsons said during a conference call with Wall Street analysts. "We will try not to over promise, and we will deliver." Robert Pittman, who will become chief operating officer of the entire company, also sounded off on ongoing concerns in the company's America Online division. Wall Street analysts have raised concerns about AOL's advertising and commerce revenue and the feared slowdown in subscriber growth. "By end of year, advertising revenue growth had slowed in step, and we expect that to slow into this year," Pittman said during the conference call. "We're not building advertising revenue growth into our budgets for 2002." Pittman also dismissed revenue growth concerns, citing 1.9 million new subscribers in December, of which 1.1 million originated in the United States. He added that the U.S. dial-up market has not reached saturation and that he expects AOL to take half of the anticipated six million in new dial-up subscribers next year. For a round-up of the latest tech business coverage, see the Business News Section. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet news forum. Let the editors know what you think in the Mailroom. And read other letters.