UPDATE 2-AOL revenue beats estimates as ad sales jump

Thu Feb 6, 2014 10:34am EST

By Jennifer Saba and Sruthi Ramakrishnan
    Feb 6 (Reuters) - AOL Inc on Thursday reported a
better-than-expected 13 percent rise in quarterly revenue,
helped by higher ad sales and cited its best growth in a decade.
    AOL's shares advanced 6 percent to $50.59 in morning trade
after the results were released.
    The company, which is trying to rely less on its declining
dial-up subscription service, has turned its focus to reap more
advertising dollars from brands.
    That involves targeting three areas of growth in digital
advertising: video, mobile and "programmatic" buying, where
machines buy and sell advertising on electronic exchanges.
    "The investments we have made are paying off," Tim
Armstrong, AOL CEO said in an interview.
    Advertising revenue soared 23 percent to $507 million on
strong growth at its third party network, which includes its
recent acquisition of video advertising platform Adap.tv.
   AOL bought Adap.tv for $405 million last year.
    That compares with Yahoo - AOL's most direct competitor  -
which turned in a bruising fourth quarter. Yahoo's 
revenue from display advertising fell 6 percent on lower priced
ads. 
    "Tim is a year ahead of the market in terms of strategic
decisions," said Laura Martin, an analyst with Needham & Co, who
noted that Armstrong turned to programmatic buying earlier than
its rivals.
    AOL said its Brand Group, which includes media properties
like The Huffington Post and TechCrunch, had increased its
adjusted operating income before depreciation and amortization
(OIBDA) to $35.6 million in the quarter, from $8.8 million in
the same quarter last year. That is partly because of deep cuts
at its hyperlocal network of neighborhood websites Patch. AOL
handed majority ownership of Patch to turnaround firm Hale
Global in January. 
    The company's total revenue was $679 million in the fourth
quarter beating analysts' forecast of $655.8 million, according
to Thomson Reuters I/B/E/S.
    Net income attributable to AOL rose to $36 million, or 43
cents per share, in the quarter from $35.7 million, or 41 cents
per share, a year earlier.
    Excluding items, the company earned 64 cents per share,
according to Thomson Reuters I/B/E/S, which came in above
analysts' average estimate of 60 cents.