AOL Earnings Solid as Company Tries to Reinvent Itself
Advertising sees growth, but investors question reliance on dial-up
AOL posted solid first-quarter earnings today as it continues its turnaround. The media company's brand business is on somewhat shaky footing as AOL continues to profit mostly from a declining dial-up platform.
Overall revenue was up 2 percent at $539 million, beating Wall Street analysts' expectations. Earnings per share were right on target at $0.32, up 45 percent from a year ago.
Though AOL reported a 9 percent increase in advertising, its stock tumbled, as AOL generated most of its revenue in the quarter through dial-up subscriptions—and investors worry that the company is relying on its increasingly obsolescent legacy business.
"The core issue with this company is can they make content profitable?" analyst Ben Schachter told Reuters.
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