There’s good news and bad news from AOL’s third quarter earnings statement released on Wednesday. Per custom, here’s the bad news first: AOL still reported a net loss of income, some $2.6 million. But that number is also the beginning of the good news: The loss, which comes to $0.02 a share, is less than the $0.07 that analysts anticipated.
Also, the loss came nominally from a drop-off in subscribers to AOL’s legacy dial-up Internet service, which the company is trying to move away from as a primary source of revenue anyway. AOL’s subscription revenue fell 22 percent from a year ago to $191 million.
On the bright side for the company, advertising revenue was up 8 percent from a year ago to $293.5 million, with global display advertising sales up 14 percent, the third quarter of consecutive growth.
In the earnings call, AOL CEO Tim Armstrong also teased the company’s plans to launch a “new social ad format for advertisers soon,” as TechCrunch called it.
The company credited the increase to its acquisitions of The Huffington Post and TechCrunch, although average monthly unique visitors to both websites remained flat from a year ago at 97 million visitors (combined for the AOL Huffington Post Media Group).
Plus, those acquisitions didn’t come without a significant degree of friction, or even outright feuding between employees, as was the case during the nearly month-long debacle that ensued in the run up to TechCrunch founder Michael Arrington’s ouster in September.
AOL’s risky local news venture Patch, too, saw an increase in ad sales and visitors, now up to 10 million monthly unique visitors, though AOL noted that it employed 10,000 bloggers, totaling out to a frighteningly low 1,000 monthly unique visitors per blogger!
Still, investors were heartened by the news, with AOL stock rising 11 percent on Wednesday. That’s even better considering the fact that AOL’s year-to-date stock was down 40 percent prior to the earnings statement, Reuters reported.
And CEO Tim Armstrong finally sought to quell months of rumors that he was seeking to merge the company with Yahoo.
As he told All Things D‘s Peter Kafka in a video interview: “When I think about our company and where our future is, and those things, it’s really as an independent entity, and being very focused on our core strategy.”
Kafka pressed him to deny any merger plans outright, asking him: “You want to be a standalone company, and you don’t want to merge with Yahoo. Right?”
To which Armstrong responded: “From our results today, and from what you’ve heard me say publicly, and what we’re focused on, the answer is yes.”
We’ll see how long that stance lasts. (Hint: Watch AOL’s share price.)
Full disclosure: The author worked for AOL News from January to November 2010.
