AOL Falls to Record Low After Reporting Second-Quarter Loss, Sales Decline
AOL’s Loss Narrows as Ad Sales Rise
Justin Sullivan/Getty Images
The AOL logo is posted on a sign in front of the AOL Inc. offices in Palo Alto, California. Global advertising sales rose for the first time since the second quarter of 2008, AOL said.
The AOL logo is posted on a sign in front of the AOL Inc. offices in Palo Alto, California. Global advertising sales rose for the first time since the second quarter of 2008, AOL said. Photographer: Justin Sullivan/Getty Images
AOL Inc. (AOL) had a record decline in New York trading after reducing its annual earnings forecast, raising concerns that the company may not be able to turn itself around following the 2009 spinoff from Time Warner Inc. (TWX)
AOL fell $3.88, or 26 percent, to $11.19 at 4:15 p.m. in New York Stock Exchange trading, the biggest drop and the lowest level since the spinoff. Earlier, the slump prompted a so-called circuit breaker that temporarily halted trading.
Chief Executive Officer Tim Armstrong has been struggling to revive AOL after the separation from Time Warner, which undid a $124 billion merger that triggered record losses and sank the company’s stock price. Rising global advertising sales in the second quarter, the first gain in three years, failed to overcome the continuing decline in subscriptions to Web access.
“The turnaround still remains questionable,” said Clayton Moran, an analyst with Benchmark Co. in Boca Raton, Florida, who rates the stock a “hold” and doesn’t own it. “Investors really have to wait longer to see if there’s anything concrete that would signal this company can be successful.”
AOL lowered its forecast for adjusted operating income before depreciation and amortization to $340 million to $370 million for the year, Chief Financial Officer Arthur Minson said today on a conference call with analysts. That fell short of Moran’s estimate of $424 million.
Second-quarter net loss shrank to $11.8 million, or 11 cents a share, from $1.06 billion, or $10.02, a year earlier. Sales slid 8.4 percent to $542.2 million, New York-based AOL said today in a statement.
The company, which has been losing Web-access customers for more than eight years, said subscription sales declined 23 percent in the quarter. Display ad revenue rose 14 percent, while analysts predicted 16 percent, Youssef H. Squali, an analyst at Jefferies & Co. who rates the shares “hold,” said in a note to investors.
To contact the reporter on this story: Brian Womack in San Francisco at bwomack1@bloomberg.net;
To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net
Rate this Page