held its first earnings call in 10 years today. Here’s what we learned listening to CEO Tim Armstrong and CFO Artie Minson:
AOL isn’t afraid to shut down revenue generators if they aren’t long-term profit generators. CFO Artie Minson said AOL shuttered its search engine campaign marketing and affiliate businesses, taking $225 million out of revenues. The trick is, Artie said this didn’t affect AOL’s profits.
AOL knows it’s the Engadget company. Our problem with AOL’s media strategy has always been that with few exceptions, its mini-brands don’t generate their own traffic. But one of those exceptions has always been the massively popular gadget blog, Engadget. So it was a relief to hear Tim describe the blog on the call as an example of niche “quality” at scale. Now AOL just needs six dozen more Engadgets.
A lot depends on AOL’s new ad platform. Asked which products will have a material impact on AOL this year, Tim pointed to AOL’s platform for freelancers, Seed.com, and its soon-to-be-released ad platform. The primary goal of the platform is to make it so AOL can serve many more advertisers.
AOL sales isn’t done re-organising. On the call, Tim said one “low-hanging fruit” that AOL could grab for more revenues is by re-organising its sales force.
AOL cost-cutting is ahead of schedule. CFO Artie Minson said the company will cut operating expenses by $150 million in 2010, net of restructuring charges.
Tim is ready to up the competitive rhetoric. Watch out Yahoo, AOL sales is gunning for you. During the call, Tim said that for years, AOL was a company “people were used to kicking around,” but these days we’re “laser focused.” “On a head-to-head basis I’d put us up against anybody for display.”
Expect more acquisitions the size of StudioNow. Tim said the $37 million StudioNow acquisition is about the right price. “We’re out of the hail mary business.” “StudioNow is a great example of what we hope to do in the future.”
AOL has a clear vision of what brand advertising is for. Tim said AOL’s job is to create brands that reflect well on other brands. He said AOL’s job is to make it so consumers are willing to spend more for branded detergents over non-branded detergents. “Period. Full stop.”
Ever the salesman, Tim isn’t afraid to ask for the order. At the end of the call, he said “I hope if you’re thinking about being a shareholder or are a shareholder, we hope you stay with us.”
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