AOL third-quarter ad sales boost overall revenue and profit

NEW YORK, Tue Nov 6, 2012 – AOL Inc. reported higher-than-expected revenue and profit on the strongest advertising growth the company has seen in seven years.

AOL said on Tuesday that third-quarter revenue was flat at $531.7 million, ahead of the analysts’ average estimate of $521.6 million, according to Thomson Reuters I/B/E/S.

Advertising revenue rose 7 percent to $340 million, while subscription revenue for AOL’s dial-up services fell 10 percent to $173.5 million.

Subscription revenue had its lowest rate of decline in six years.

These trends are helping AOL since its turnaround hinges on the success of getting more online advertising dollars and reducing its reliance on the lucrative but moribund dial-up business.

“Things look great,” RBC Capital Markets analyst Andre Sequin said. “This company is continuing to make steps in the right direction.”

Still, there are troubling signs in the results. Domestic display advertising, where AOL is making a big effort, including with splashy acquisitions such as the Huffington Post, fell 3 percent in the quarter.