Time Warner (TWX: sentiment, chart, options) reported first-quarter earnings of $771 million, or 21 cents per share, a 36% decline compared to a profit of $1.2 billion, or 31 cents per share, a year earlier. Revenue jumped 2% to $11.42 billion from $11.18 billion in the year-ago period. Excluding items, earnings docked at 22 cents per share, or 24 cents per share after adding restructuring charges at New Line Cinema. Analysts, on average, forecast earnings of 23 cents per share.

Time Warner's AOL unit reported a 25% decline in quarterly profit, with revenue falling 23%. The company attributed the weaker results to sagging subscription fees and a lackluster 1% gain in online advertising. Elsewhere, TWX's cable TV profits jumped 7% with revenue gaining 8%, movies and TV production profits fell 16% with revenue rising 4%, profit from cable networks inched 2% higher on a 10% gain in revenue, while programming expenses spiked 23% higher on rising costs for sports broadcasts.

However, the in-line earnings report wasn't the only catalyst spawning chatter on the Street. The company announced that it will spin off the rest of its cable TV business, a somewhat expected move after months of investor pressure. TWX execs didn't go into specifics about the spinoff, though they did hint that the company and the board should come to a final agreement soon.

In late-morning trading, the shares of TWX are down nearly 1%, hovering near $15.15. The stock has declined roughly 35% since trading near the 23 level in mid-January, and has recently faced resistance from its 20-week moving average.

Despite the decline, Zacks reports that 11 of the 13 ranking analysts rate the stock a "buy" or better, with Thomson Financial indicating the average 12-month price target for TWX remains at $21.86 mere cents below the stock's annual high. This configuration leaves ample room for price-target cuts or downgrades, which could weigh heavily on the shares.