Jeff Bewkes confident after TWC spinoff

Also hints that AOL separation is in the works

NEW YORK -- In his annual letter to shareholders, Time Warner chairman and CEO Jeffrey Bewkes expressed confidence in the company's business after the recent TW Cable spinoff despite the recession. And he signaled a possible return of stock buybacks and hinted that a widely expected spinoff of AOL could indeed be in the works.

"Despite today's economic headwinds, I'm very confident about the future of our company," Bewkes said in the letter. "With the steps we've taken over the last year, Time Warner is now a leaner and more tightly focused company." And he promised: "While these are extraordinarily challenging times, I have great confidence that Time Warner will emerge in an even stronger competitive position."

Discussing AOL, Bewkes lauded the recent hiring of former Google executive Tim Armstrong and promised to focus on the future structure of the online arm next, which many expect will be spun off. "We've recently brought in a new management team with impressive experience in online advertising, and we're working hard to determine the best structure for AOL's businesses," Bewkes wrote.

Sources have said a spinoff is the likeliest path given Armstrong's experience and standing, as well as a recent move that shifted debt from AOL to HBO, making a separation of AOL easier.

Bewkes also mentioned the special $9.25 billion dividend TW got from TWC as part of their separation, which it has started to put to use.

"This payment, coupled with the robust free cash flow generated by our businesses, puts Time Warner in the enviable position of being able to do a number of things at once -- increase investments in our businesses, reduce our level of debt and return value directly to our stockholders through dividends and stock repurchases," Bewkes said. While TW had stopped its share repurchases, will look to "restart our stock buyback under our currently authorized program when we can," the CEO said.