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UPDATE 1-Time Warner CEO buys $500,000 in stock

Mon Aug 6, 2007 5:21pm EDT

Stocks

   

(Recasts, adds byline)

By Kenneth Li

NEW YORK, Aug 6 (Reuters) - Wall Streeters are not the only ones who see Time Warner Inc (TWX.N) shares as undervalued.

Time Warner Inc (TWX.N) said on Monday Chief Executive Richard Parsons purchased about $500,000 worth of the company's stock in a show of confidence in the company's future.

Parsons purchased on Friday 26,867.27 stock units under Time Warner's deferred compensation plan at $18.61 per share.

Shares of Time Warner, seen as undervalued by Wall Street, closed on Monday down 13 cents at $18.48.

Time Warner stock trades at a discount to its big media peers. The company's enterprise value, or its market capitalization plus debt and excluding cash, traded at 7.75 times its expected 2008 cash flow, according to Reuters Estimates. News Corp NWSa.N traded at 11.57 and Walt Disney Co (DIS.N) traded at 8.45.

Analysts have said uncertainty over its future, including whether it will spin off part or all of its AOL Internet unit, has kept some investors at bay.

A sudden decline in online advertising growth in the second quarter also spooked investors last week after Time Warner reported financial results. The company also ratcheted down its 2007 online ad growth for the remainder of the year.

The employment contract for Parsons, who has received high marks for settling internal disputes after the purchase by AOL, government investigations and gotten its operating businesses growing again, expires in May 2008.

(Reporting by Kenneth Li)

((Editing by Phil Berlowitz, Richard Chang; Reuters Messaging: kenneth.li.reuters.com@reuters.net; +646-223-6224; e-mail: kenneth.li@reuters.com)) Keywords: TIMEWARNER STOCK/

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