Net income advanced to $21.1 million, or 22 cents a share, from $4.7 million, or 4 cents, a year earlier, the New York- based company said today in a statement. Excluding some items, per-share profit was 31 cents. Analysts had predicted 17 cents, the average of estimates compiled by Bloomberg.
Chief Executive Officer Tim Armstrong is transforming AOL into an ad-based digital-publishing business, as customers of its legacy dial-up Internet-access division switch to broadband offered by cable operators. The company bought the Huffington Post for $315 million last year and expanded Patch, a local-news division that Armstrong said he expects to command about $50 million in sales this year and to become “run-rate profitable” by the end of 2013.
AOL is also looking to expand the technology sites Engadget and TechCrunch by working with another company, and has no “appetite to sell them,” Armstrong said in a telephone interview today. The technology blog PandoDaily earlier reported that AOL was looking to offload those properties, without citing anyone.
“We’re very interested in partnering with someone to invest more heavily in those sites,” Armstrong said, declining to name potential investors.
AOL, which was spun off from Time Warner Inc. in 2009, rose 3.5 percent to $26.47 at the close in New York. The shares have advanced 75 percent this year.
While total advertising revenue increased 5 percent to $330.1 million, U.S. display advertising fell 1 percent to $118.9 million, the first decline in the last five quarters.
“I was not happy with domestic display over the course of Q1,” Armstrong said. One major advertiser cut spending with AOL during the first quarter, he said.
Total AOL sales declined 4 percent to $529.4 million, from $551.4 million a year earlier, while topping the $525.2 million average of analysts’ estimates.
In April, AOL agreed to sell more than 800 patents to Microsoft Corp. for $1.06 billion. The transaction is expected to close by the end of the year. Microsoft may have to pay $211.2 million if the deal is terminated, AOL said in the statement today.
AOL will return all of the proceeds from the patent sale to shareholders, Armstrong said on a conference call.
AOL faces a fight with Starboard Value LP over directors’ seats. Starboard -- the fifth-largest shareholder, according to data compiled by Bloomberg, with 5.2 percent -- has urged investors to vote for its three nominees at the annual meeting June 14.
Starboard has estimated that AOL lost $545 million last year -- in adjusted earnings before interest, taxes, depreciation and amortization -- in its display advertising business. AOL doesn’t disclose adjusted EBITDA by business segment.
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