DULLES, Va., Wed May 9, 2012 – AOL Inc. reported better-than-expected quarterly revenue and profit on Wednesday, although lower premium ad sales in the United States and subscriptions dragged total revenue down.
The company said first-quarter revenue fell 4 percent to $529.4 million, beating analysts’ average forecast of $526.5 million.
Total advertising revenue grew 5 percent on strong growth in third-party network ads and international growth.
But display advertising – big splashy units on Web pages that command high prices – hit a hurdle in the United States, where it fell 1 percent.
“I wasn’t surprised that much,” said Benchmark analyst Clayton Moran about AOL’s display ad revenue. “We saw similar weakness from Facebook and Yahoo.”
“It could be an industry thing or that Google is gaining so much (ad revenue) share that other parties are losing,” Moran said.
Late in April, Facebook reported its first quarter-to-quarter revenue drop in at least two years, blaming it on seasonal advertising trends.
Since its spinoff from Time Warner in 2009, AOL has been attempting to transform into a media destination dependent on advertising revenue, while at the same time winding down its lucrative dial-up service.
The company has snapped up a host of high-profile media properties, like the Huffington Post and TechCrunch, and has poured millions of dollars into a network of neighborhood news sites called Patch.
In the meantime, AOL has agreed to sell the majority of its patents for approximately $1 billion to Microsoft, which in turn is selling them to Facebook.
The company faces a looming proxy fight with one of its largest shareholders, Starboard Value. Starboard contends that AOL is not doing enough to return value to shareholders and has nominated a slate of three directors to the AOL board.