AOL just reported first quarter revenues of $664.3 million.
According to the AP, Analysts polled by Thomson Reuters on average expect an adjusted profit of 69 cents per share on $679 million.
So that’s a miss.
AOL’s ad revenues declined yet further — down 19% y/y to $354.3 million.
This beat Citi analyst Mark Mahaney expectations of $352 million ad revenues, but it’s still really bad.
Remember, AOL’s ad business is supposed to eventually supplant its very profitable Internet service provider business, which also declined — down 28% to $282.7 million.
In brighter news, AOL finally managed to sell its instant messaging business, ICQ, to Russian holding firm DST for $187 million. Maybe it will spend some of that money on Associated Content.
Here is the release.
And here are the “noteworthy” items AOL would like shareholders to take away from today’s earnings:
- AOL significantly reduced costs in Q1 2010 as operating expenses declined $139 million versus Q1 2009. These cost reductions reflect a significant reduction in the size of AOL’s workforce and the Company’s exit from a number of unprofitable international markets and product offerings as well as cessation of paying a PC manufacturer for distribution on a per unit shipped basis.
- AOL successfully executed meaningful operational changes which will allow the business to scale. The list of items executed include restructuring the salesforce, the launch of Ad Desk in beta, extensive testing of a new content management system and the acquisition of StudioNow. AOL also added meaningful management strength through talent acquisition and M&A in the quarter.
- AOL had $262.4 million of cash-on-hand, or approximately $2.45 per share of cash, on its balance sheet on March 31, 2010. Q1 2010 cash provided by continuing operations was $162.9 million and Free Cash Flow was $125.1 million. AOL has not borrowed under the terms of its $250 million revolving credit facility from December 9, 2009 (the date of the spin-off) through April 28, 2010.
- AOL continued to prudently manage its portfolio in 2010, acquiring StudioNow for $32.1 million and selling buy.at for $16.4 million and entering into a definitive agreement to sell its ICQ operations for $187.5 million on April 28. AOL is also exploring strategic alternatives for Bebo, including its sale or shutdown in 2010.
- AOL continues to experience significant revenue declines. Q1 2010 revenue reflects the disruption associated with our domestic salesforce reorganization, international restructuring initiatives and a lower volume of AOL Properties inventory monetized through our network, leading to declines in our advertising revenue, and fewer subscribers which led to declines in subscription and search & contextual advertising revenue.
- AOL’s subscriber monthly average churn rate was 3% in Q1 2010, improving meaningfully year-over-year.
- Q1 2010 operating income and Adjusted OIBDA include $23.4 million in restructuring costs versus $58.3 million in the year ago period.
- Q1 2010 operating income and net income declines also reflect an increase in amortization expense of $27.4 million primarily related to our reevaluation of the useful lives of certain intangible assets in connection with our restructuring initiatives.
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