AOL beats expectations on growing ad sales
The media giant sees an increase of almost 350% in net income for the first quarter.
AOL (AOL) saw a nearly 350% increase in net income in the first quarter as its expenses declined and advertising revenue rose.
A drop in restructuring costs helped AOL's income rise to $21.1 million, or 21 cents per share, from $4.7 million, or 4 cents per share. Analysts had been expecting 17 cents. Advertising revenue rose 5% to $330 million.
AOL has expanded out of its original web access services since its 2009 spinoff from Time Warner. In March 2011, AOL completed the purchase of Huffington Post, which had more than 27 million unique monthly U.S. visitors at the time of the acquisition. About six months earlier AOL purchased the TechCrunch family of sites. It also owns local-news sites in the Patch.com network.
"AOL is a much stronger company today than a year ago," CEO Tim Armstrong said Wednesday in a press release. The company has grown advertising revenue and lowered expenses this year, he added.
Subscription revenue for the company declined 15% to $182 million and revenue declined 4% to $529 million, beating the $525.2 million average estimate of analysts surveyed by Bloomberg.
AOL made more than $1.05 billion in April with the sale of some 800 patents to Microsoft (MSFT). AOL said at the time it would return a significant portion of the proceeds to shareholders. (Microsoft owns and publishes Top Stocks, an MSN Money site.)
Starboard Value, a hedge fund with a 5% stake in AOL, has been pressuring shareholders to elect its three-member slate of director candidates to the board at the June 14 stockholder meeting. Unsurprisingly, Armstrong and other execs are against the move.
In a letter to shareholders earlier this month, Armstrong called Starboard's approach short-sighted and said it would weaken the company's products and attractiveness to advertisers. Starboard "has never offered any viable strategy or vision for the future of the Company," he added.
AOL headed into the close Wednesday with a gain of nearly 3.7% to $26.52. MSFT was up less than 1% to $30.76.
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