Shares of AOL Inc. (NYSE: AOL), the No. 7 website, rose slightly after the company reported better-than-expected first-quarter results and promised to pass on $1 billion in patent payments to shareholders.

In early activity, AOL shares rose 15 cents to $26.62, bringing their 2012 gain to nearly 80 percent. By the close, they fell 18 cents to $26.28 only to jump 13 cents in after-hours trading.

The New York-based company reported profits leaped 400 percent as revenue eased 4 percent to $529.4 million. Net income was $21.1 million, or 22 cents a share. Operating profit was 31 cents a share, nearly double what analysts had expected.

Some of the gain was attributed to the sale of $1.05 billion in patents to Microsoft Corp. (Nasdaq: MSFT), the world's biggest software company, many of which were then resold to Facebook (Nasdaq: FB), the No. 1 social network.

In an investor call, CEO Tim Armstrong repeated plans to pass the gains along to shareholders. He also said the service didn't plan to divest properties, including TechCrunch and Engadget.

Meanwhile, the company faces a proxy fight with hedge fund investor Starboard Value LP at its June 14 annual meeting. Starboard already owns about 5.3 percent of AOL's outstanding shares. In a filing withb the U/S. Securities and Exchange Commssion, Starboard principal Jeffrey C. Smith charged Armstrong's management continued to undervalue the company. Despite having 100 million unique visitors and $573 million in revenue, AOL's display business is losing $500 million annually.