AOL Inc reported its best quarterly revenue growth in eight years
because of strong search and advertising sales, and its shares rose more
than 7 percent.
The company said on Friday that total revenue rose 4
percent to nearly $600 million in the fourth quarter, beating analysts'
estimates of $573.7 million, according to Thomson Reuters I/B/E/S.
revenue, an important metric for the company as it moves away from
subscription-based dial-up services and emphasizes its media properties
like the Huffington Post and Patch, rose 13 percent to $410.6 million.
was advertising sold through AOL's third-party network that helped
boost overall revenue. Revenue jumped 37 percent to $183.5 million at
AOL Networks, a market to sell inventory on behalf of publishers.
As of this quarter, AOL introduced new segmentation that provides more clarity on its business units.
advertising sales represent AOL's future growth, the subscription unit -
now classified as the "membership group" that includes the legacy
dial-up service - is still providing the bulk of profit.
special items, operating income before depreciation and amortization
for the membership group was $158.7 million for the quarter -
representing the vast majority of the total.
"It's not great to
see so much of the bottom-line contribution coming from the revenue
segment in decline," said Evercore analyst Ken Sena.
While Sena said the company made "steady progress" over the past two years, "it still has a ways to go."
AOL's board also authorized the repurchase of $100 million in stock.
income rose to $35.7 million, or 41 cents per share, in the fourth
quarter from $22.8 million, or 23 cents per share, a year earlier.
Earnings per share were in line with analysts' estimates.
AOL shares were up 7.4 percent at $33.75 in trading before the market opened.
© Thomson Reuters 2013