AOL Q1 Profit Plunges On Charges; Revenue Rises, Beats Estimates

(RTTNews) - Web services company AOL, Inc. (AOL) reported Wednesday a sharp decline in first-quarter profit, impacted by higher charges. Revenues, however, increased on strong advertising revenues and beat analysts' estimates.

In pre-market activity, AOL shares are losing $3.41 or 7.77 percent, and trading at $40.49.

AOL Chairman and CEO Tim Armstrong said, "Q1 marks the 5th consecutive quarter of consumer, revenue and Adjusted OIBDA growth. AOL's investment in global media and technology platforms is allowing AOL to compete on a global scale."

For the first quarter, net income attributable to the company plunged 64 percent to $9.3 million from last year's $25.9 million. Earnings per share fell 66 percent to $0.11 from $0.32 a year ago.

New York-based AOL, spun off from Time Warner, Inc. (TWX) in December 2009, noted that its earnings were negatively impacted by items of $19.7 million or $0.23 per share related to restructuring and asset impairment charges. This is compared to last year's charges of $7.7 million or $0.09 per share.

On average, 19 analysts polled by Thomson Reuters expected earnings per share of $0.45 for the quarter. Analysts' estimates typically exclude one-time items.

Operating income plunged 52 percent year-over-year to $24.2 million. Adjusted operating income before depreciation and amortization or adjusted OIBDA increased 2 percent to $107.3 million, driven by higher revenue and a 9 percent decline in general and administrative expenses.

The company's total revenue increased 8 percent to $583.3 million from $538.3 million reported a year back, driven by global advertising revenue growth. Eighteen analysts estimated revenues of $577.70 million for the quarter.

During the quarter, global advertising revenue grew 16 percent year-over-year to $433.4 million. Ad revenues were benefited by 55 percent growth in Third Party Platform revenue on increased sale of premium formats and by the inclusion of revenue from Adap.tv. Third Party Platform Revenue grew 18 percent excluding Adap.tv.

Meanwhile, Global display revenue dropped 3 percent and Global Search revenues edged down 1 percent.

Subscription revenue fell 10 percent year-on-year to $149.9 million.

Domestic AOL subscribers declined 9 percent to 2.422 million from last year's 2.662 million. Domestic AOL subscriber monthly average churn was 1.5 percent, compared to 1.9 percent last year.