AOL Reports Its Ad Revenue Will Decline, Analysts Say Drop Not Indicative Of Overall Ad Economy

sad aol man

In a 10-K filed to the Securities and Exchange Commission Tuesday, AOL has adjusted its first-quarter earnings projections down, saying it now expects ad revenue to decline. Previously, AOL had provided guidance for flat year-over-year revenue in its fourth-quarter earnings call.

AOL has previously stated that its recent wave of cutbacks could affect near-term performance as the company restructures. Imran Khan, Internet, Media and Entertainment Analyst at JPMorgan, says he believes that the revenue drop is indeed the result of sales force restructuring and does not reflect larger change in the Internet ad economy.

"We don't believe the macroeconomic environment has changed," says Khan, and he reports that the outlook for display advertising remains unchanged. For example, he says, "we maintain our estimate of 7% growth for YHOO display revenue in Q1," referring to the company's optimistic outlook for Yahoo.

In February, AOL reported its revenue was down 17% year-over-year, but also that its domestic display advertising revenue had actually grown 1% across all its properties, even as display revenue declined 3% globally.

In January AOL let 1,400 employees go, just weeks after 1,100 had "volunteered" to leave when the company offered a "Voluntary Separation Program." CEO Tim Armstrong has said he anticipates restructuring efforts will reduce ongoing operating expenses by about $150 million in 2010, even while warning there could be near-term fallout.

1 comment about "AOL Reports Its Ad Revenue Will Decline, Analysts Say Drop Not Indicative Of Overall Ad Economy".
Check to receive email when comments are posted.
  1. Jonathan Mirow from BroadbandVideo, Inc., March 3, 2010 at 11:35 a.m.

    Show of hands: how many people out there visit Hmmm, that's what I thought. You, in the back row with your hand up - what's that, a dial-up modem? Dude, you are SO retro.

Next story loading loading..