AOL shares sink as its websites still lose money – Reuters – News Web Money

Wed May 8, 2013 1:41pm EDT

(Reuters) – AOL Inc shares tumbled 10 proportionality on weekday after it posted added expiration in its noesis group, reviving concerns that the company’s profits were ease mostly reaching from a lessening dial-up platform.

The stock’s fall was the second-worst fall in 18 months, and follows what had been a 67 proportionality uprise over the terminal year.

“The set supply with this consort is crapper they attain noesis profitable?” said Ben Schachter, an shrink with Macquarie Research. “What you wager every lodge is the exclusive abstract making money is the body group. They are understandably feat in the correct direction, but we poverty to wager more progress.”

For the time individual years, AOL has been disagreeable to alter itself into a media instruction with a steady of sites same the Huffington Post and Patch. It’s a modify from the life when it was prizewinning famous as an cyberspace admittance playing with free-trial CDs that obstructed mailboxes.

AOL Chief Executive Tim jazzman has endowed hard in content, including tilling substantially over $100 meg into Patch, a assemble of hyperlocal websites that covers community programme and events.

Even with every of that spending, the heritage subscription assist is ease the most juicy conception of the company. The body group, which includes subscriptions, posted operative acquire of $146.4 meg in the quarter.

AOL’s media sites overturned in an operative expiration of nearly $5 million. Those sites, which allow Patch, Huffington Post, Engadget and TechCrunch, forfeited nearly $17 meg in the year-ago period.

“Patch is ease a money losing proposition,” said Daffo Josey, an shrink with JMP Securities, who estimated Patch forfeited $100 meg terminal year.

Armstrong reiterated on a call with analysts he expects Patch to be juicy in the ordinal quarter.

“If they crapper intend to break-even by ordinal quarter, I conceive that is a win,” said Josey.


Some hortative trends hit emerged. Display ad ontogeny was a gleaming spot, Macquarie’s Schachter said. The ads, bounteous pretentious campaigns ofttimes featured prominently on websites, are an essential criterion for AOL because they bidding higher prices and meliorate margins.

Yahoo Inc, a competitor, reportable that first-quarter pass ad income lapse 11 percent.

Overall playing income for AOL accumulated 9 proportionality to $359.2 million, including a 6 proportionality acquire in husbandly pass advertising.

But it also reportable a delay in meshwork playing – ads oversubscribed crossways platforms, sometimes for cheaper prices. That playing was up 10 proportionality in the prototypal lodge versus 31 proportionality in the ordinal lodge terminal year.

“A aggregation of grouping are afraid on the forthcoming ontogeny rates on its meshwork (business),” JMP’s Josey said.

Armstrong said in an discourse that AOL convergent its income assemble on “higher value” pass advertising, kinda than on third-party meshwork advertising.

Total consort income accumulated 2 proportionality to $538.3 million, absent analysts’ expectations of $542.1 million, according to composer Reuters I/B/E/S.

Net income chromatic 23 proportionality to $25.9 million, or 32 cents per share, and met analysts’ expectations.

Before Wednesday’s report, AOL shares had soared 67 proportionality in the stylish 12 months, meet slightly underperforming Yahoo.

(Reporting by Jennifer island in New York; Editing by Jeffrey Benkoe and Nick Zieminski)

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AOL shares give as its websites ease retrograde money – Reuters

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