AOL to report results Wednesday for first quarter since spinoff from Time Warner

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Earnings Preview: AOL to report 4th-qtr results

SAN FRANCISCO — AOL Inc. reports its fourth-quarter results on Wednesday before the market opens. The following is a summary of key developments and analyst opinion related to the period.

OVERVIEW: During the fourth quarter, AOL separated from parent Time Warner Inc. and began trading once again as a stand-alone Internet company.

AOL officially split off from the media conglomerate on Dec. 10, ending a disastrous corporate marriage that began when AOL acquired Time Warner at the height of the dot-com boom in 2001.

AOL rose to fame in the 1990s with its legacy dial-up Internet access business, but this began to decline after peaking in 2002, thwarted by the rise of speedier broadband Internet connections.

For the past several years, the company has been trying to reinvent itself as a content and advertising company — a difficult task as advertising revenue has not been able to offset the drop in dial-up revenue.

In preparation for the spinoff, AOL announced numerous changes throughout the quarter, including naming a new board in October with CEO Tim Armstrong as chairman and announcing intentions to shed about 2,300 workers in November — or about a third of its work force.

The company, which had already cut thousands of workers in recent years and had about 6,900 by late 2009, asked for volunteers to accept buyouts and said in January that it would lay off 1,200 workers because only 1,100 people volunteered to leave.

BY THE NUMBERS: Analysts polled by Thomson Reuters expect an adjusted profit of 62 cents per share on $763.5 million in revenue.

ANALYST TAKE: In a recent client note, Broadpoint.AmTech analyst Benjamin Schachter said that since this will be AOL’s first solo quarter “there is significant uncertainty regarding how the company will interact with the Street.”

Schachter, who rates the stock “Neutral” with a $25 price target, expects “relatively cautious” statements regarding efforts to turn around the business.

WHAT’S AHEAD: The Internet advertising market appears to be improving in general — market leader Google Inc. reported fourth-quarter Internet advertising growth, while rival Yahoo Inc. reported a smaller drop in revenue than in the first nine months of the year and projected modest growth in the first quarter. It remains to be seen, though, if AOL is benefiting from this changing tide.

STOCK PERFORMANCE: AOL, issued at $23.67, has traded in a range of $22.01 to $27 and finished Friday at $23.97.