AOL quarterly revenue rises on strong ad sales

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By Reuters | Updated: 11 February 2013 20:04 IST
AOL Inc reported its best quarterly revenue growth in eight years because of strong search and advertising sales, and its shares rose more than 7 percent.

The company said on Friday that total revenue rose 4 percent to nearly $600 million in the fourth quarter, beating analysts' estimates of $573.7 million, according to Thomson Reuters I/B/E/S.

Advertising revenue, an important metric for the company as it moves away from subscription-based dial-up services and emphasizes its media properties like the Huffington Post and Patch, rose 13 percent to $410.6 million.

It was advertising sold through AOL's third-party network that helped boost overall revenue. Revenue jumped 37 percent to $183.5 million at AOL Networks, a market to sell inventory on behalf of publishers.

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As of this quarter, AOL introduced new segmentation that provides more clarity on its business units.

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While advertising sales represent AOL's future growth, the subscription unit - now classified as the "membership group" that includes the legacy dial-up service - is still providing the bulk of profit.

Excluding special items, operating income before depreciation and amortization for the membership group was $158.7 million for the quarter - representing the vast majority of the total.

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"It's not great to see so much of the bottom-line contribution coming from the revenue segment in decline," said Evercore analyst Ken Sena.

While Sena said the company made "steady progress" over the past two years, "it still has a ways to go."

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AOL's board also authorized the repurchase of $100 million in stock.

Net income rose to $35.7 million, or 41 cents per share, in the fourth quarter from $22.8 million, or 23 cents per share, a year earlier. Earnings per share were in line with analysts' estimates.

AOL shares were up 7.4 percent at $33.75 in trading before the market opened.

© Thomson Reuters 2013

 

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Further reading: AOL, Internet
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