NEW YORK (CNN/Money) - Time Warner, Inc. reported first-quarter results that surpassed Wall Street estimates, thanks to improving advertising in its network television division, better than expected sales in its large cable business and strong results from its film studio.

And though the company's troubled AOL Internet unit reported another quarter of subscriber losses, Wall Street appeared to focus on strong profit growth from the unit.

"We're hitting on all cylinders," CEO Richard Parsons said in an interview with Lou Dobbs Tonight Wednesday evening.

Time Warner's stock rose more than 3 percent after-hours.

Time Warner, Inc. reported first quarter results that surpassed Wall Street estimates. Lou Dobbs talked to Chairman, CEO Dick Parsons about the strong showing. Play video (Real or Windows Media)

The New York-based media conglomerate reported net income of $961 million, or 20 cents a share, a 143 percent increase from earnings of $396 million or 9 cents a share a year earlier.

Excluding discontinued operations and the effect of an accounting change, earnings came in at 15 cents a share, far surpassing analysts' expectations of 9 cents a share, according to Thomson First Call.

Time Warner's operating income, another widely watched measure of profitability, grew 40 percent from a year ago to $1.6 billion. Analysts were forecasting operating income of $1.23 billion.

Operating income before depreciation and amortization, or OIBDA, rose 27 percent from a year ago to $2.4 billion. Analysts had been expecting OIBDA of about $2.1 billion.

Sales came in at $10.1 billion, a 9 percent increase from last year and ahead of the Wall Street consensus estimate of $9.5 billion.

Shares of Time Warner (TWX: Research, Estimates), the parent company of CNN/Money, rose more than 3.5 percent, to $17.09, in after-hours trading, after falling nearly 2 percent in regular trading Wednesday on the New York Stock Exchange.

The stock has dropped more than 8 percent year-to-date despite hopes for an improving advertising climate. Investors have expressed concerns about a continuing decline in dial-up subscribers at the company's AOL Internet unit, relatively weak performance in its cable division and speculation that Time Warner is interested in going back on the prowl for acquisitions.

Although the company's AOL business did report another decline in subscribers -- it ended the first quarter with 24 million U.S. subscribers, a decrease of 237,000 from the fourth quarter -- revenues were unchanged from a year ago and OIBDA rose 21 percent.

Wall Street saw the bright side of the AOL unit's results. "There were less subscriber losses at AOL. They did a decent job there," said Paul Kim, an analyst with Tradition Asiel Securities.

During the Lou Dobbs Tonight interview, Parsons noted the turnaround at the AOL unit. "The numbers surprised people; that business is stabilizing," he said. Parsons added that he thinks the right management is in place at the division and that results from the unit could continue to improve.

However, the company disclosed in its earnings report that the Security and Exchange Commission and Department of Justice investigations into accounting practices at the AOL unit is continuing and could lead to further restatements of Time Warner's financial results

The company's cable division also reported more stable numbers, which should soothe the Street. Sales increased 11 percent from a year ago.

Time Warner reported a sales increase of less than 10 percent in its cable division in the fourth quarter, sparking some concerns about a slowdown of growth in this crucial business. Cable accounts for nearly a third of Time Warner's total OIBDA.

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"The main disappointment last quarter was the rate of growth for Time Warner Cable, slipping below double digits," said David Joyce, an analyst with Guzman & Co. "Hopefully now, things are normalizing."

The company's cable unit added 137,000 digital cable subscribers and 193,000 high-speed data subscribers in the quarter.

Looking at Time Warner's other big businesses, sales from filmed entertainment, Time Warner's largest division in terms of revenues, increased 25 percent from a year ago, led by strong home video sales and the success of the third installment of the Lord of the Rings movie trilogy. OIBDA from filmed entertainment increased by 70 percent from a year ago.

The company's network division, which includes HBO, CNN and TBS, reported a relatively small sales increase of 5 percent from last year. But OIBDA increased by 47 percent. Sales from publishing, Time Warner's smallest division, decreased 5.6 percent while OIBDA increased by 15 percent.

"Simply put, we had a great quarter, and we couldn't be more pleased," said Parsons during a conference call with analysts. "All of our business segments contributed to OIBDA growth for the first time in three years."

Parsons added that adjusted OIBDA growth for the full year, which excludes goodwill impairments from acquisitions and gains and losses from asset sales, should increase in the low double digits for the year.

That's up from guidance of high single digit to low double digit growth that Parsons gave in January. Parsons also said that all business segments, with the exception of filmed entertainment, should post higher OIBDA growth for the year than they did in 2003.

Jeffrey Bewkes, chairman of Time Warner's entertainment and networks group, said during the conference call that the filmed entertainment division will face tough comparisons this year because of strong box office and DVD sales. Nonetheless, he said the filmed entertainment business should still report year-over-year growth in OIBDA this year.

The company also pared its net debt load to $18.8 billion as of the end of the quarter, down from $22.7 billion at the end of last year. Time Warner sold its Warner Music business to an investor group for $2.6 billion last month.

The cleaning up of Time Warner's balance sheet has led to market chatter that Time Warner will look to make an acquisition in the near future. Rumors have centered on film studio MGM (MGM: Research, Estimates) and the assets of bankrupt cable firm Adelphia.

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Addressing the question of possible acquisitions during the conference call, Parsons dismissed the recent reports about an imminent purchase as "rank speculation." He added that despite the balance sheet improvements, it was still premature for Time Warner to consider buying back stock or begin paying a dividend.

"What we have been doing is focusing on running the business," Parsons said. "We are going to be very prudent, very disciplined and very measured about how we deploy capital."

During his interview with Dobbs, Parsons said that any investment would have to add value from a shareholder's perspective, adding, "We're not going to let this money burn a hole in our pockets."

"We are poised to take advantage of opportunities to increase our return on investment and growth profile," said Parsons.

Analysts quoted in this story do not own shares of Time Warner and their firms have no investment banking relationships with the company.

The reporter of this story owns shares of Time Warner as part of his company's 401(k) plan.