• by Gavin O'Malley  @mp_gavin, July 25, 2012

Despite persistent problems in the key area of display advertising, AOL was able to post a second-quarter profit on Wednesday.
 
The company reported quarterly net income of $970 million, or $10.17 per share, which it happily compared to a net loss a year earlier of nearly $12 million, or 11 cents per share.
 
Thanks in large part to the sale of select patents to Microsoft, AOL’s latest earnings report represented the first time in four years that the company could claim growth in operating income before depreciation and amortization.
 
“The strong results and consumer performance we announced today are clear signs our strategic and operating efforts are translating into significant financial progress,” AOL Chairman and CEO Tim Armstrong said Wednesday.
 
Yet while ad revenue rose 6%, the gain was mostly due to ad sales abroad, along with third-party ad sales from its Advertising.com unit.
 
Domestic display ad revenue was flat for the quarter, which does compare favorably to broader industry trends. Indeed, according to eMarketer, domestic online ad spending in the second quarter rose nearly 24%.
 
“Domestic display revenue reflects growth in reserved inventory pricing and Patch revenue, partially offset by a decline in reserved impressions sold,” according to AOL.
 
It could have been worse for AOL, however. In the previous quarter, domestic display ad revenue fell by 1%.
 
Total revenue fell 2% to $531 million, which still beat analysts’ expectations. All told, AOL added about $1 billion to its books following a patent sale to Microsoft.
 
Third Party Network revenue increased $17.8 million, reflecting 11% growth in Advertising.com and $7.5 million related to the inclusion of Ad.com Japan. (AOL said it began consolidating the joint venture in the first quarter of the year as a result of acquiring a controlling interest in it.)
 
According to AOL, Ad.com growth reflects an increase in publishers on the network, as well as increased sales of higher-margin premium packages and products.