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

   
Priyanka Gandhi Vadra, daughter of Congress party chief Sonia Gandhi, adjusts her flower garlands as she campaigns for her mother during an election meeting at Rae Bareli in Uttar Pradesh April 22, 2014. REUTERS/Pawan Kumar

Election 2014

More than 814 million people — a number larger than the population of Europe — are eligible to vote in the world’s biggest democratic exercise.  Full Coverage 

(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:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Apple

REUTERS SHOWCASE

Hacking Threat

Hacking Threat

All at sea: global shipping fleet exposed to hacking threat.  Full Article 

Mt. Gox Update

Mt. Gox Update

Tokyo Court orders bankruptcy trustee to begin Mt. Gox liquidation .  Full Article 

Net Neutrality

Net Neutrality

U.S. regulators to propose new net neutrality rules in May.  Full Article 

Facebook Results

Facebook Results

Facebook Q1 revenue grows 72 percent on rising mobile ads.  Full Article | Related Story 

Huawei Shrugs

Huawei Shrugs

China's Huawei says reports of NSA spying won't impact growth  Full Article 

Betting on Content

Betting on Content

AOL, Microsoft lure advertisers with TV-style shows.  Full Article 

Restructuring Plans

Restructuring Plans

Zynga's Pincus withdraws from operations amid turnaround.  Full Article 

Security Threat

Security Threat

FBI warns healthcare sector vulnerable to cyber attacks.  Full Article 

Online Streaming

Online Streaming

Amazon grabs rights to stream older HBO shows.  Full Article 

Reuters India Mobile

Reuters India Mobile

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