"The $45 billion goodwill writedown was much larger than anyone expected," said David Joyce, an analyst with Guzman & Co. in Miami.
Separately, the company announced Ted Turner is stepping down from his role as AOL Time Warner's vice chairman. The former cable TV mogul wants to spend more time on his philanthropic endeavors, AOL chief Richard Parsons said.
"He's concluded now is the right time to make more space for his other activities," Parsons said in a conference call with analysts.
Turner told Parsons late Tuesday that he would step down, effective in May.
AOL shares added 30 cents, or 2 percent, to $13.96 on Wednesday in regular trading but fell 88 cents in after-hours trades following the announcement.
The charge left AOL with a fourth-quarter loss of $44.9 billion, or $10.04 per share, compared to its loss a year-ago $1.8 billion, or 41 cents. Coupled with the $54 billion charge in the first quarter of 2002, the company ended the year with a loss of more than $100 billion.
AOL's operating earnings came in at 28 cents a share, beating the 27-cent estimate of analysts polled by Thomson First Call.
Before the announcement, the investment community said it wanted to hear Parsons detail his plans for America Online, the proposed initial public offering of the company's cable division, and the aftermath of resignation of Chairman Steve Case, whom Parsons has succeeded.
Executives said they expect 2003 revenue to grow "in the mid-single-digits" and earnings before taxes, depreciation and amortization to be essentially flat. Analysts had been forecasting roughly 5 percent growth in revenue.
Two years after AOL and Time Warner's $106 billion merger, which could be considered the crowning moment of the Internet boom, the company has been forced to justify the rationale for the deal, overcome questions about its accounting and plot a massive turnaround.
The top executives who assembled the merger are gone, including America Online co-founder Steve Case, who announced his resignation as AOL-Time Warner chairman this month.
The bright spot has been Time Warner's media properties, which include CNN, Warner Music, Time and People magazines and the Warner Bros. film division that boasts blockbuster franchises like "Harry Potter" and "Lord of the Rings."
The weak link has been the AOL online division, which now hopes for a jolt from expanding high-speed Internet access and rolling out new music, information and shopping services.
The America Online unit has dragged the company down and disappointed investors by failing to reach Wall Street's revenue projections. Further, the analysts fret that the upcoming digital revolution may someday eclipse America Online's trademark dial-up feature. Their worst fear is that it will look obsolete as customers seek faster and faster services.
AOL Time Warner this week also sold its 8.4 percent stake in Hughes Electronics Corp., the parent company of the DirecTV satellite service. Analysts have speculated that AOL will make other cash-raising moves, such as selling its book-publishing division and the Atlanta Braves.
Parsons said he was pleased with the fourth-quarter performance and pledged to "run each of our businesses as well or better than before, with a continued major focus on stabilizing and revitalizing America Online."
AOL's shares have tumbled 49 percent in the past 12 months, or approximately double the 25 percent decline by the benchmark Standard & Poor's 500 Index of stocks.