AOL shares slump as revenues fall short of Wall Street forecast

SHARES in AOL tumbled 8.9 per cent yesterday after it posted another loss in its content group, reviving concerns that the company’s profits were still mostly coming from a shrinking dial-up platform.

The stock’s plunge follows what had been a 67 per cent rise over the last year.

Total company revenue increased two per cent to $538.3m (£346.2m), missing analysts’ expectations of $542.1m.

Net income rose 23 per cent to $25.9m to meet analysts’ expectations.

AOL’s media sites turned in an operating loss of almost $5m. Those sites, which include Patch, Huffington Post, Engadget and TechCrunch, lost almost $17m in the year-ago period.

Overall advertising revenue for AOL increased nine per cent to $359.2m, including a six per cent gain in domestic display advertising.

But it also reported a slowdown in network advertising – ads sold across platforms, sometimes for cheaper prices. That business was up 10 per cent in the first quarter versus 31 per cent in the fourth quarter last year.

The membership group, which includes AOL’s subscription service, posted operating profit of $146.4m in the quarter. The membership unit includes subscription revenue from its dial-up service, the lucrative but dwindling business.