AOL stock jumps after 2Q results show ad growth

AP News
Posted: Jul 25, 2012 1:15 PM
AOL stock jumps after 2Q results show ad growth

NEW YORK (AP) — Shares of AOL Inc. rose to their highest level in more two years on Wednesday after the Internet company reported stronger-than expected second-quarter revenue and its fifth straight quarter of advertising growth — signs that its efforts to turn its business around are starting to pay off.

A one-time gain of close to $1 billion from a patent sale and licensing deal with Microsoft Corp. helped AOL return to profit during the quarter as well. The company earned $970.8 million, or $10.17 per share, in the April-June period. A year ago, AOL posted a loss of $11.8 million, or 11 cents per share.

Revenue slid 2 percent to $531.1 million from $542.2 million. AOL said that this was its lowest rate of revenue decline in seven years. Analysts, on average, were expecting revenue of $519.6 million, according to a poll by FactSet.

AOL's advertising revenue grew 6 percent during the quarter to $337.8 million from $319 million. It was AOL's fifth consecutive quarter for year-over-year ad revenue growth, a hopeful sign for investors that the faltering Internet icon is improving its business.

A Web pioneer back in the 1990s, the Internet company has been shedding subscribers for its dial-up Internet access service for years. Its business now relies on advertising, and it has tried to make its websites more appealing to advertisers by adding popular content and drawing more visitors. To do so, it bought The Huffington Post news website in 2011 and technology blog TechCrunch a year earlier.

Subscription revenue — money from its fading dial-up Internet service — declined 13 percent to $175.5 million from $201.3 million.

Other income came from AOL's April agreement to sell Microsoft 800 patents, and license others, for about $1.06 billion. That resulted in a one-time gain of $945.8 million for the second quarter and $96 million in licensing income.

Shares of AOL rose $1.61, or 5.9 percent, to $29.10 in afternoon trading. Earlier, the stock hit $29.22, its highest level since April 2010.