AOL reports 86% drop in first quarter profit
AOL (NYSE: AOL) posted signficantly lower first quarter profits on Wednesday, reflecting a substantial drop in subscription and advertising revenue.
For the first three months of 2011, the New York-based company posted net income of $4.7 million, or $0.04 per share, down from $34.7 million, or $0.32 per share, in the year-ago period.
Adjusted for expenses related to its acquisitions, such as that of The Huffington Post, as well as restructuring charges and other items, earnings were $0.22, beating the $0.19 predicted by analysts.
Revenue fell 17% to $551.4 million, as advertising sales, the largest segment, sunk 11%, and subscription revenue declined 24%.
However, the company drove attention away from this in its statment, as it highlighted that global display revenue, part of the ad unit, grew 4%, marking the first quarter of year-over-year growth since the fourth quarter of 2007. This was due to better pricing, and increased activity from automakers and other advertisers.
AOL also said that advertising revenue would have been flat if not for the impact of initiatives implemented by the company, such as the shutdowns of some of its European businesses and the de-emphasis of lower margin search engine products, as well as the sale of Bebo and ICQ messenger.
In fact, display advertising in the US rose 11% to $122.0 million, driven partially by the acquisitions of the Huffington Post and tech blog TechCrunch.
At quarter-end, the company had $381.8 million of cash.
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