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AOL's revenue tumbles 23 percent

Working to rebuild his company, CEO Tim Armstrong still has a grace period before investors expect to see results. But for how much longer?

Web advertising is back, but not at AOL: The company says revenue declined 23 percent in the last quarter, with ad sales dropping by 19 percent.

The company reported earnings of 32 cents on revenue of $664 million. Add back one-time charges and you'd get earnings of 79 cents per share.

The Street was looking for revenue of $679 million, and I've seen "consensus" expectations for earnings all over the map--ranging from 34 cents a share (including restructuring charges) to 80 cents (which excludes the charges). The just-announced sale of ICQ doesn't figure into the first-quarter results, and won't do so until the third quarter.

Here's Citigroup analyst Mark Mahaney's ever-helpful "cheat sheet" to assist you in interpreting the numbers (click to enlarge):

AOL Q1 cheat sheet
Screenshot by AllThingsD

In the old days, you'd be able to say that AOL's results helped you understand the Web advertising market, a la earlier numbers from Google and Yahoo. But given that CEO Tim Armstrong is still rebuilding his company, that's not the case here. While both Yahoo and Google showed significant revenue growth, AOL is still shrinking.

But Armstrong has had the job for a year, and didn't start his overhaul in earnest until last summer. So he still has a grace period before investors expect to see results.

How much longer does he have? AOL's public line is that there won't be much movement until the end of 2010. But privately they concede that they'll have to start impressing people this summer in order to justify expectations, which are surprisingly high--AOL shares are up by about 20 percent this year.

AOL's earnings call starts at 10am eastern; I'll check back with them then.