AOL CEO Tim Armstrong’s confidence seems to be finally rubbing off on Wall Street.
After reporting lower than expected losses and advertising gains in the third quarter, shares in the company climbed 10 percent to $14.70.
The stock is still down about 40 percent from where it was a year ago, but the response to this earnings report is far better than investors’ reaction last quarter. In August, shares in AOL hit an all-time low after the company posted quarterly losses.
For the third quarter, AOL reported a net loss of $2.6 million, compared to net income of $171.6 million in the same period a year ago. But the company said global advertising revenue increased 8 percent, which marks the second consecutive quarter of ad revenue growth.
“AOL is intent on becoming the next great media company for the digital age,” said Armstrong on a call with investors Wednesday morning. While AOL may have experienced short-term pain, he said, “the benefits are starting to show.”
Believing that advertisers are going to want fewer big digital partners, Armstrong said the company is focused on building its business and revenue in “an ‘Art of War’ way.”
Total revenue for the quarter was $531.7 million, down 6 percent from the same quarter last year. A 22 percent decline in its subscription business and 15 percent fall in search contributed to that decline. But investors seemed pleased that its key display advertising business is making moderate, but steady, progress.
Under AOL’s new ad sales chief Ned Brody, who assumed the role in July, Armstrong said, the company is focused on three areas: “clean and clear direction” for the top 500 accounts, with extra attention on the top 100 accounts; operational improvements in scaling its premium display format Project Devil and similar efforts; and boosting analytics capabilities.
Possibly alluding to news reports about merger talks with Yahoo, Armstrong said, “There’s been a lot of noise around the company.” But he emphasized that internally the company is focused on positioning “the assets, people, and strategy against what we think the big opportunities are.”
Wrapping up the call, he said that the company would continue on its "comeback road" with more consolidation and an upcoming social tool.