AOL shares rose sharply on Wall Street today as the Internet company posted a quarterly net loss but increased display advertising revenue for the third quarter in a row.
The company reported a net loss of $2.6m in the third quarter compared to a net profit of $171.6m the same time a year ago, which included a big gain from the sale of instant messaging service ICQ. Revenue was down 6% at $531.7m but came in slightly better than expected by Wall Street analysts.
AOL's overall advertising revenue rose 8% to $317.7m. Revenue from display advertising, which includes banners, rich media and video and commands higher prices, increased 15% to $136.7m.
Analysts say that AOL's share of the $12.33 billion US display ad market will fall to 4.2% this year from 4.8% in 2010. The company's share of overall US online ad revenue will decline to 2.7% this year, down from 3.4% last year, they added.
Subscription revenue from AOL's steadily shrinking dial-up Internet access service dropped 22% in the third quarter to $191.9m.
Traffic to AOL sites rose only 1% during the quarter despite the acquisitions over the past year of technology blog TechCrunch and news and opinion site The Huffington Post.
AOL said its sites had an average 107 million monthly unique visitors during the quarter, compared to 106 million during the same quarter a year ago. AOL bought The Huffington Post in March for $315m and TechCrunch in September of last year.
Chairman and chief executive Tim Armstrong, who was brought in from Google two years ago to execute a turnaround, said AOL continued to make progress in the quarter and was on the path to eventual profit growth.
Formerly known as America Online, AOL fused with news and entertainment giant Time Warner in 2001 at the height of the dotcom boom in what is seen as one of the most disastrous mergers ever. It was spun off by Time Warner in December 2009 into an independent company.
