AOL ad sales boost third quarter profits

Tue Nov 6, 2012 8:04pm IST

A woman walks out of AOL offices in New York, November 19, 2009. REUTERS/Shannon Stapleton/Files

A woman walks out of AOL offices in New York, November 19, 2009.

Credit: Reuters/Shannon Stapleton/Files

Related Topics

Stocks

   

(Reuters) - AOL Inc (AOL.N) reported higher-than-expected revenue and profit on the strongest advertising growth the company has seen in seven years.

AOL said on Tuesday that third-quarter revenue was flat at $531.7 million, ahead of the analysts' average estimate of $521.6 million, according to Thomson Reuters I/B/E/S.

Advertising revenue rose 7 percent to $340 million, while subscription revenue for AOL's dial-up services fell 10 percent to $173.5 million.

Subscription revenue had its lowest rate of decline in six years.

These trends are helping AOL since its turnaround hinges on the success of getting more online advertising dollars and reducing its reliance on the lucrative but moribund dial-up business.

"Things look great," RBC Capital Markets analyst Andre Sequin said. "This company is continuing to make steps in the right direction."

Still, there are troubling signs in the results. Domestic display advertising, where AOL is making a big effort, including with splashy acquisitions such as the Huffington Post, fell 3 percent in the quarter.

That compares with the overall U.S. display ad market estimated to grow more than 20 percent to $14.98 billion, according to research firm eMarketer.

AOL's advertising revenue was lifted by search revenue and double-digit growth in third-party network revenue.

Display ads are big, pricey units on Web pages favored by brand advertisers. Third-party network consists of AOL's Ad.com, which helps sell ads across other properties. These types of ads usually command lower prices than display-ad units.

"We weren't exactly 100 percent drilled and focused on the advertising strategy the first half of the year. But we are now," said AOL Chief Executive Tim Armstrong on a call with analysts.

"I think overall, what you're going to see is an operational improvement around advertising as we get into 2013."

The company, however, has taken a number of steps over the year, including selling some of its patents to Microsoft for $1 billion and returning those proceeds to shareholders.

Net income was $20.8 million, or 22 cents per share, compared with a year-earlier loss of $2.6 million, or 2 cents per share.

AOL's third-quarter EPS of 22 cents was well ahead of analysts' forecast of 17 cents.

The company raised its estimate for 2012 adjusted OIBDA to about $400 million from $375 million.

(Reporting by Jennifer Saba; Editing by Lisa Von Ahn, Maureen Bavdek and Sofina Mirza-Reid)

FILED UNDER:
  • Most Popular
  • Most Shared

Google in Europe

Tech Showcase

Advanced Software

Advanced Software

Computer spying malware uncovered with 'stealth' features - Symantec.  Full Article 

Apple Settlement

Apple Settlement

Apple $450 mln e-book settlement gets final court approval.  Full Article 

Samsung Complain

Samsung Complain

Samsung files ITC complaint to block Nvidia chips from U.S. - Bloomberg.  Full Article 

Jeep SUVs

Jeep SUVs

Chrysler says it will speed up recall repairs for Jeep SUVs.  Full Article 

Internet Rules

Internet Rules

Any new U.S. Internet rules must withstand lawsuits - FCC chief.  Full Article 

Amazon's Plan

Amazon's Plan

Amazon plans ad-supported video streaming service - NY post.  Full Article 

Cellphone Upgrade

Cellphone Upgrade

Mobile phones to get handy upgrade.  Video 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage