AOL reports first annual rise in revenues for eight years

http://www.guardian.co.uk/technology/2013/feb/08/aol-revenues-rise

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AOL reported its first annual rise in revenues in eight years on Friday as strong advertising sales underlined the fallen internet star's recovery.

Total revenues rose 4% in the fourth quarter to $599.5m, beating analysts' expectations. The company has been buying back stock and pledged to buy another $100m. AOL's shares soared over 9% in early trading.

Advertising revenue rose 13% to $410.6m. But the company still makes most of its money from dial-up internet subscriptions, a fading business that still added $158.7m in revenues after accounting adjustments. AOL's two main ad businesses generated $15.2m after adjustments.

"AOL returned to growth and generated significant value for shareholders in 2012," said Tim Armstrong, chairman and CEO. "AOL has strong momentum entering 2013 and is positioned to continue on our growth path by executing our strategy to build the next generation media and technology company."

The ad growth was driven by a 37% rise in revenues for AOL Networks, which sells advertising on behalf of publishers. Revenues at AOL Brands, which includes the Huffington Post, TechCrunch and Patch, a local news network, rose 4%.

The brands division was dragged down by a poor performance from Patch. Armstrong had predicted that the network's 900 sites would make between $40m-$50m in 2012 but the total was $34m.

On a call with analysts, Armstrong said Hurricane Sandy had affected the local news network. "Sandy essentially followed the path of the Patch rollouts," he said.

AOL continued to lose customers at its membership dial-up internet business. Subscription revenues fell 10% as the company reported a 15% drop in subscribers year-over-year.

AOL shares are up more than 16% so far this year and over 89% year to date. Last year Armstrong, a former Google ad executive, successfully defended his strategy to turn the company around against activist shareholder Starboard Value. He also sold $1bn of patents to Microsoft, returning the money to shareholders.