Earnings Preview: AOL Inc.

Tim Armstrong leans forward at the NYSE

SAN FRANCISCO (AP) — Internet company AOL Inc., which separated from Time Warner Inc. late last year, reports its first-quarter results Wednesday before the market opens.

WHAT TO WATCH FOR: Signs AOL’s online advertising business is getting stronger.

AOL grew up in the 1990s as a dial-up Internet company, but this business has declined for years as faster broadband Internet connections from cable and phone providers become increasingly popular. The company has been working to reinvent itself as a content and advertising business, operating websites like tech blog Engadget and personal finance site WalletPop.

This process has been difficult, with advertising revenue dropping throughout last year. But AOL’s revenue fell less in the fourth quarter of 2009 than in previous quarters, as the online ad market began to bounce back from.

WHY IT MATTERS: AOL’s performance will provide new information on how well the online advertising market is bouncing back from last year’s slump.

So far this year, the market appears to be doing better. Google said earlier this month that its first-quarter revenue rose 23 per cent, and Yahoo Inc. said its first-quarter revenue rose 1 per cent. Both derive the vast majority of their revenue from online ads.

WHAT’S EXPECTED: Analysts polled by Thomson Reuters on average expect an adjusted profit of 69 cents per share on $679 million in revenue.

LAST YEAR’S QUARTER: AOL, which was then a part of Time Warner, reported revenue of $867 million.

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