AOL narrows Q2 losses, but results still disappoint Street, plunges 19%
AOL (NYSE:AOL) announced Tuesday it narrowed its second quarter loss as its March acquisition of news website The Huffington Post boosted advertising revenues, but sinking subscription revenue still resulted in disappointing figures.
For the three months ending June 30, the internet and media giant narrowed its net loss to $11.8 million, or an 11-cent loss per share, compared to a loss of $1.1 billion, or $9.89 loss per share, a year ago.
The company said the latest period included impacts of 15 cents a share for restructuring costs and other one-time items, compared to $10.41 a share a year earlier.
Total revenues sank 8.4% to $542.2 million, largely on a 23% drop in subscription revenues.
Analysts expected per-share earnings of 4 cents a share, on $530 million in revenue.
Once known for its internet providing services, the business has been declining steadily, as domestic subscriber count fell 21% to 3.4 million in the latest quarter, with average revenue per user (ARPU) slipping to $17.53.
Despite this loss, total advertising revenues saw a 5% hike to $319 million, led by 16% growth in online display advertisements. Overall display advertising revenue rose 14%.
AOL's newly acquired Huffington Post and technology blog TechCrunch pushed domestic advertising revenues to $126.8 million for the quarter, the company said.
"AOL's return to global advertising growth for the first time since 2008 reflects the hard work of our team and another meaningful step forward in the comeback of the AOL brand," said CEO Tim Armstrong.
Still, international ad sales dropped 10% to $10.8 million during the quarter. Search and contextual advertising revenues also slid to $87.8 million, down 21%, on fewer domestic and international searches, and fewer domestic subscribers.
The July 2010 sale of ICQ and the sale of Digital Marketing Services, also in 2010, negatively impacted ad revenues by $5.9 million and $1.3 million, respectively.
However, third party network revenues were up 29%, reflecting growth at AOL's Ad.com, and the acquisitions of 5 Minutes and goviral A/S.
Despite the New York-based company's growth in advertising, investors were not convinced. Its stock on the New York Stock Exchange plummeted 19.77% today, to trade at $12.09 per share as of 12:00 pm EDT.
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