HuffPo purchase weighs down AOL earnings
First-quarter earnings dive 86 percent, largely due to the costs of integrating the Huffington Post news site. Display ad revenue is up, a first since 2007.
AOL saw its profits for the first quarter nosedive by 86 percent as the company struggled to swallow the costs of buying the Huffington Post.
For the quarter ended March 31, the online service watched its profits fall to $4.7 million from $34.7 million in the year-ago quarter. Revenue also fell, reaching $551.4 million, a 17 percent drop from $664.3 million a year ago.
AOL closed its $315 million purchase of the Huffington Post in March, integrating the media Web site with its AOL Media and AOL Local units. Buying the Huffington Post as well as other properties, such as TechCrunch and Engadget, is been part of the company's strategy to beef up its online presence as customers continue to flock from its core Internet service. But integrating the Huffington Post helped boost AOL's quarterly restructuring costs by 19 percent to $27.8 million.
For the quarter, Internet subscription revenue dropped 24 percent to $215.4 million. Overall ad revenue fell 11 percent to $313.7 million. However, the company touted an increase in global revenue from display ads of 4 percent, the first quarter of year-over-year growth in that area since the end of 2007.
"Today represents an important milestone in the turnaround of AOL as global display revenue grew for the first time since Q4 2007," AOL CEO Tim Armstrong said in a statement. "I am proud of the work completed thus far and we remain focused on accelerating our momentum through continued execution of our strategy to become the premier digital content company."