AOL revenue down 26 percent with ad struggles

By @ibtimes on

AOL Inc reported better-than-expected profit but revenue declined sharply as the Internet company suffered from slides in advertising sales and dial-up subscriptions.

AOL reported fourth-quarter earnings on Wednesday of $66.2 million, or 61 cents a share, as it lowered expenses. In the period a year ago, it earned $1.4 million or 1 cent a share. That period included $106 million in restructuring costs.

Excluding items, AOL's earnings from continuing operations were 70 cents a share, stronger than the 46 cents a share analysts had expected, according to Thomson Reuters I/B/E/S.

Chief Executive Tim Armstrong has been trying to transform the company, known for its dial-up Internet access business, into an media and entertainment powerhouse. But AOL has struggled to increase its advertising sales, and investors have fled the stock.

Shares have declined about 12 percent in the last three months, underperforming the media sector as well as the broader Standard & Poor's 500 index.

For the fourth quarter, advertising revenue fell 29 percent to $331.6 million on declines in search, display and third-party ads. Subscription revenue fell 23 percent to $235.9 million.

Overall, revenue fell 26 percent to $596 million. While that surpassed the $587.5 million analysts had expected, the sharp drop reflects the troubles AOL is having in a web advertising business dominated by Google.

Google Inc., which has been the search market leader for a decade, reported nearly 30 percent gains in both profit and revenue when it reported quarterly earnings in January.

AOL was spun off from Time Warner Inc a little more than a year ago. Since then, as a stand-alone company, AOL has been immersed in a blur of sales, launches and acquisitions, including purchasing the influential technology blog TechCruch for about $30 million.

The company committed $50 million to build out Patch, a network of local community sites totaling 500 this year. More recently, it redesigned its home page and has reached tie ups with celebrities such as Heidi Klum and Gisele Bundchen.

(Reporting by Paul Thomasch)

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