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The first-quarter loss, which is largely a paper one and is explained by new accounting rules, highlights the fact that the merger of AOL and Time Warner is in serious trouble.

The fortunes of the company have tumbled dramatically. The combined stock market worth of the company has plunged from the post-merger value two years ago of $290bn to today's $85bn.

In January, AOL reported that advertising and commerce revenues had declined by 14% in the fourth quarter of 2001, with losses for the period widening to £1.3bn, compared with £715m for the same period last year. The results were in line with forecasts the company had made at the beginning of January. However, these had been substantially revised down following the terrorist attacks of September 11.

The loss comes as no surprise and will not rock Wall Street when its results are issued at roughly 4.30pm EST. The company has already seen its stock drop 41% this year as the advertising downturn bit hard.

The figures are another indication of the uphill task facing new CEO Richard Parsons. He replaced Gerald Levin last year. Some are even suggesting that the company might be broken up.

In the last few weeks, the company has come under sustained attack as the industry wonders, not just where it is going, but whether it actually has a broadband strategy, because it is the internet arm that is pulling down a relatively decent performance by the film and TV unit.

The $50bn figure is so vast that it is bigger than the gross domestic product of a number of countries, and not just those in the third world but the likes of Croatia and Bulgaria in Eastern Europe.

Speaking to the Los Angeles Times, entertainment analyst Harold Vogel of Vogel Capital Management in New York, said: "Most analysts will dismiss it and say it's now behind them and doesn't matter because it's non-cash. But it's an admission of a humongous mistake."

AOL Time Warner has said it expects its asset write-down to be $54bn.

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