AOL Is Hanging By A Thread Because Of Decrease In Revenue

AOL Inc has posted its fourth quarter earnings like all companies are expected to do. As it happens in the world of Internet business, here we bump against another paradox: AOL shows increase in profit but a decrease in revenue. AOL posted a net income of $22.8 million or 23 cents per share, in the three months which culminated with December 31. Compared to the same period of last year, there has been a decreased of 66% from 66.2 million or 61% per share.

Revenue fell downwards as well, with 3% from the previous $596 to $576.8. Analysts almost got it right, predicting $573.1 million. On the other hand advertising revenue was raised with 10% to 363.8 million. “One important note in our Q4 earnings is the improvements in the AOL services over the last year are really starting to payoff. The advertisers want to spend money with fewer and bigger partners, and that trend is accelerating.”, a report from Seeking Alpha says.

The company experienced a cost growth mainly because of money spent on recent acquisitions. For example, back in 2010 AOL bought the Huffington Post paying $315 million and the technology blog TechCrunch. Overall in 2011, AOL earned $13.1 million or 12% per share. It experienced a lost of $782.5 million or $7.34 per share, and revenue fell 9% to $2.2 billion from $2.42 billion.



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