AOL reported its third quarter earnings today. The good news is that revenue increased by six percent, from $532 million last year to $561 million this year. The bad news is that profits dropped 90 percent, to only $2 million.
The decline in net income was mostly due to Patch, AOL’s hyperlocal news sites that never quite panned out. AOL reported a $19 million pretax restructuring cost and a $25 million impairment charge, both related to Patch.
At some point, you would think AOL would stop the Patch experiment. The company regularly cuts employees and even shutters sites, yet Patch continues to be deadweight.
Tim Armstrong, AOL’s CEO, is either much smarter than everyone realizes, or much more naive. He claims that Patch will be profitable by the end of the year. Somehow, we just don’t see that happening.