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AOL reported what it said was its first overall growth in revenue in eight years, as a 13% increase in ad sales offset a 10% drop in Internet-access subscription revenues
Total revenue was up 3.9% at $599.5 million, topping Wall Street estimates of $574 million.
AOL stock rose 7% on the results, signaling investors' confidence that AOL CEO Tim Armstrong's strategy of turning the one-time Internet access company into an advertising-driven digital media company was making progress.
"We have walked through the valley of the turnaround and have gotten to growth," Mr. Armstrong said on a call with analysts.
But some of the core problems that have vexed investors over the past few years have remained. Operating income before depreciation and amortization, excluding one-time items, fell 7% to $123.3 million. And for the first time, the company broke out its results into three segments, and the segment containing the media properties like the Huffington Post and Patch showed a 34% drop in Ebitda despite modest revenue growth of 4% to $213 million for the quarter. The earnings drop reflected the high investment costs of new ventures like Patch and HuffPost Live.
The bulk of adjusted operating income before depreciation and amortization came from the company's declining subscription business.
Source: Wall Street Journal | KEACH HAGEY