AOL posts profit as revenues slide
- Added:
- Feb 05, 2010
AOL has reported its first financial figures since its spin off from Time Warner at the end of last year, posting profits of$1.4 million revenue of $809.7 million, down 17 percent from a year ago.
The revenue drop was due to declining subscriptions and a weak online advertising market.
Net income for the quarter was $1.4 million. For the same period a year prior, AOL lost $1.9 billion due to a $2.2 billion non-cash goodwill impairment charge.
AOL became an independent, publicly traded company in December after Time Warner spun it off via an initial public offering.
In recent years, AOL has sought to change its business model, moving away from being an ISP (Internet Service Provider) and focusing on becoming an online advertising and content services company.
The company's total advertising revenues were down 8% to $471.6 million from the fourth quarter of 2008.
Display advertising sales outside the U.S. fell 22% due to soft markets in the U.K., Germany and France, AOL said. Display advertising in the U.S. rose 1% to $151.7 million.
AOL said revenue from search and contextual advertising -- the strength of competitor Google -- fell 19% due to a 27% drop Internet access subscribers, which AOL said tend to search more frequently and monetize at a higher rate than non-subscribers on its properties.
Despite drastic changes in its corporate structure, AOL still has the largest reach of any advertising network in the U.S., according figures released last month by comScore. AOL had an audience of 187 million U.S. Internet users in December 2009. Yahoo came in second with 180.9 million and Google at 178.1 million.
AOL's e-mail has 60% fewer advertisements now aiming to give advertisers premium placement on pages with fewer ads in return for higher charges.
The company has also taken steps to tighten its expenses. In December, AOL sought up to 2,500 employees who were willing to voluntarily walk away from their jobs in order to trim about a third of its staff of 6,900 at the time. However, only 1,100 employees took AOL up on its offer.
To reach is staff-reduction goal, AOL earlier this year began laying off between 1,200 to 1,400 employees worldwide.
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