AOL to report 2nd-Qtr results on Wednesday, analysts expect decline in revenue
By APMonday, August 2, 2010
Earnings Preview: AOL to report 2Q results
SAN FRANCISCO — Internet company AOL Inc. is scheduled to report its second-quarter results before the market opens on Wednesday.
WHAT TO WATCH FOR: Improvements in AOL’s online advertising business.
The company started as a dial-up Internet company in the 1990s, but as this business fades with the rise of faster Internet connections AOL has turned itself into a content and advertising business that is increasingly reliant on revenue from online ads.
So far, this has not been easy. Advertising revenue fell last year, as AOL and competitors in the online ad space were hurt by a slump in the market.
And though some companies that depend heavily on online ads — such as Google Inc. — saw growth in the first quarter, AOL didn’t fare well then either: its profit sank 58 percent due to declines in both online ad and dial-up Internet subscription revenue. AOL said at the time that recent cuts to its staff led to the falling ad revenue.
WHY IT MATTERS: If AOL does well, it will offer another data point on how well the online advertising market is recovering from last year’s slump.
Competitors have reported some positive news so far: Both Google and IAC/InterActiveCorp, for example, recently indicated online ad growth in the April-June period.
WHAT’S EXPECTED: Analysts polled by Thomson Reuters expect a profit of 41 cents per share on $602 million in revenue.
LAST YEAR’S QUARTER: At this time last year, AOL was still part of Time Warner Inc. It reported revenue of $804 million.
