Aol Misses Mark, Reports Lower than Expected Earnings

Aol has been on a rocky road as of late. After the split with Time Warner, we watched as the former internet service provider rebrand itself as a new media company with mixed results. One of the more memorable moments included the purchase of Bebo for $850 million back in 2008 and its subsequent sale two years later for approximately $10 million. Other sales include the once popular chat service ICQ and Kayak, a travel search site.

The company also made headlines when it went on a mad hiring dash for writers, editors, photographers, and videographers, in an attempt to become one of the largest producers of in-house content on the Web. The latest episode in the Aol saga has the company reporting a serious loss in the second fiscal quarter.

So how big is big? According to Reuters, Aol reported over a $1 billion dollar net loss. They only posted $584.1 million in revenue, which amounts to a 26% decline from last quarter. Wall Street analyst didn’t set the earnings bar particularly high for the company, speculating that they would at pull in at least $610M.  Aol blames the loss on a drop in advertising revenue as well as the continued shedding of subscribers from its dial-up internet service business. Ad sales are down 27% as are subscription sales. The Bebo sale also put a damper on Aol’s financial situation.

Execs at Aol remain hopeful, noting that the company is still going through the process of rebranding and restructuring its advertising business.

“In the second quarter, we continued our efforts to successfully reposition AOL for growth and the company is getting healthier every day,” chairman and CEO Tim Armstrong, who joined the company early last year following a high-profile role in Google’s sales ranks, said in the earnings release. “Although we have much more significant goals for the future of AOL, we are pleased with this quarter’s internal and external trends.”

Going into the third quarter, it doesn’t look like Aol can afford another hiccup. What are your thoughts on their current efforts at rebranding? Do you think it will be enough to turn the company around? Share your thoughts in the comments section.

About the Author
Sherri is a freelance writer that has a love of all things fun and geeky including gadgets, gaming, anime, and comics. When she isn't writing or out on the town living it up, she loves doing 10-12 hour marathon sessions on her Xbox 360 or one of her older consoles. It's not an addiction, it's a way of life!
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