AOL Profit Declines 66% in Fourth Quarter
NEW YORK - AOL Inc. on Wednesday posted lower fourth-quarter financials, but exceeded Wall Street expectations, sending its stock higher.
As of 9:55am ET, the stock was up 10.7 percent at $17.95.
The Internet company, led by chairman and CEO Tim Armstrong, reported quarterly earnings of $22.8 million, down 66 percent from the year-ago period driven by higher costs and tax provisions. The figure exceeded analysts' average projection though. Restructuring costs of $ 2.8 million weighed on the latest quarter.
Revenue declined 3 percent to $576.8 million, the lowest rate of decline in five years. AOL grew advertising revenue 10 percent, its third consecutive quarter of year-over-year growth.
The latest earnings report came about a year after AOL announced the acquisition of The Huffington Post. For the full year 2011, AOL's revenue declined 9 percent to $2.2 billion. The bottom line for the year swung to a profit of $13.1 million after a year-ago loss of $782.5 million.
“AOL took a large step forward in the fourth quarter, and I am very pleased with the way we ended the year," said Armstrong. "Our fourth-quarter results highlight AOL’s ability to methodically improve our consumer offering and financial performance. We continue to invest in AOL and will continue to improve our operations during 2012.”
On a conference call with analysts, Armstrong said that AOL could "potentially grow revenue in 2012 for the first time in a very long time." His team has a very clear focus on growth, and "there is a chance we can get there based on the work we are doing," but outside factors, such as the economy, are hard to gauge, he said.
Asked about AOL's position in the ad space compared to other big online players, Armstrong said the company has the ability to compete with Facebook and Google for campaigns.
Armstrong also said on Wednesday that AOL's premium video series with the likes of Heidi Klum and Mark Burnett, unveiled in October, are off to a great start. There is "very substantial demand for video programming" among advertisers, and AOL has seen "very strong receptivity" for its online shows so far. The ones it has launched are already profitable, he added. The Burnett show based on the CliffNotes series "has been a big success," and Klum's videos have "done exceptionally" in terms of revenue and profit, Armstrong said. "You will see us roll out more video partnerships" and bigger ones, he said.
Asked about talent turnover at tech blog TechCrunch, which AOL previously acquired, Armstrong shrugged off any concern. "We are adding talent," he said, calling the blog "a very strong brand" with "very strong people." Its value rose last year, and he expects more growth in 2012, Armstrong added.