• by Gavin O'Malley  @mp_gavin, February 3, 2010

Still burdened by weak advertising and waning subscriptions, a newly independent AOL on Wednesday reported revenue down 17% year-over-year.

"We have made significant progress in support of the long-term vision we see in the future of AOL," said chief executive Tim Armstrong, painting as rosy a picture as possible.

Still, Armstrong conceded, "today's results continue to reflect the need for our focus and execution on the work required in the turnaround of the company."

During the fourth quarter, domestic display advertising revenue actually grew by 1% across all AOL properties, while global display advertising revenue declined 3%.

AOL attributed ad revenue declines to continued declines in search queries and lower revenue per search, due primarily to a 27% year-over-year decrease in domestic AOL subscribers, who apparently search more frequently and typically monetize at a higher rate than non-paying visitors.

Going forward, Armstrong said, "we have a clearly defined strategy, and we enter 2010 incredibly focused on day-to-day execution."

On a crusade to put AOL back on the right track, Armstrong has lately been talking up the company's 100 million monthly unique visitors, and its ability to reach multiple audiences with one ad buy.

In a word, Armstrong's vision centers around original -- rather than repurposed -- content. A year ago, AOL licensed as much as 80% of its content, while today, the company says it generates 80% of it.

Last year, Armstrong outlined a new five-point strategy for the future of AOL. As outlined internally and to members of the press, it included the continued expansion of its communication tools, vertical content, local and online mapping services, its third-party ad network, and early-stage investment through a newly formed AOL Ventures arm.

Likewise, the new AOL is being positioned less as a Web portal and more as a fragmented network of niche content sites. This MediaGlow network, so-called, encompasses over 70 niche content sites -- with many more on the way.

AOL on Wednesday said it anticipated restructuring efforts to reduce ongoing operating expenses by about $150 million in 2010.

Last month, the company issued pink slips to about 1,400 employees, just weeks after about 1,100 of their peers "volunteered" to leave the company as part of its "Voluntary Separation Program."

Year-over-year, revenue was down $809.7 million from $974.2 million.