(Corrects error in Thomson Reuters I/B/E/S revenue estimates to
$542.1 mln from $537.1 mln in 8th paragraph)
May 8 Online media group AOL Inc on
Wednesday reported first-quarter revenue grew on strength in its
advertising business, but shares tumbled on concerns that
profits were still mostly coming from a shrinking dial-up
"The core issue with this company is can they make content
profitable?" said Ben Schachter, an analyst with Macquarie
Research. "What you see every quarter is the only thing making
money is the membership group. They are clearly going in the
right direction but we want to see more progress."
AOL posted an operating loss of almost $5 million from its
media sites, including Patch, the group of hyperlocal websites,
the Huffington Post, Engadget and TechCrunch. AOL spent more
than $100 million to get Patch off the ground.
The membership group, which includes AOL's subscription
service, posted operating profit of $146.4 million in the
quarter. The membership unit includes subscription revenue from
its dial-up service, the lucrative but dwindling business.
Schachter said display ad growth was a bright spot in the
quarter. Display ads - big splashy campaigns often featured
prominently on websites - are an important benchmark for the
Overall advertising revenue increased 9 percent to $359.2
million on an 8 percent increase in global display advertising.
Revenue from the media sites, including Huffington Post,
TechCrunch and Engadget, jumped 14 percent to $189.6 million, on
higher ad sales.
Total company revenue increased 2 percent to $538.3 million,
lower than analysts' expectations of $542.1 million, according
to Thomson Reuters I/B/E/S.
Net income rose to $25.9 million, or 32 cents per share,
from $21.1 million, or 22 cents per share, in the same period a
The stock dropped 5.3 percent to $39.22 in premarket trade.
Shares have soared 67 percent in the past 12 months.
(Reporting by Jennifer Saba in New York; Editing by Jeffrey