• The Washington Post , Tuesday, November 7, 2006 12:16 PM

AOL execs have once again come out smiling, as their comeback plan is working. Maybe all this positive talk is a major reason why shares of parent Time Warner continue its meteoric rise. If you look at the numbers, AOL lost 2.5 million subscribers in the third quarter, yet it managed to keep 2 million of them as customers of the new free service. In addition, the company added 1 million new members, a small net gain.

AOL CEO Jonathan Miller says AOL should continue to post overall revenue declines for several quarters.

The really good news is that ad revenue received a nice bump across AOL's sites--and at the expense of Yahoo, says Miller. Third-quarter ad revenues jumped 46% from the comparable period a year earlier. AOL's operating income, before depreciation and amortization, grew 21%. Miller says he expects the company to maintain a similar growth rate to the online advertising industry overall. Yahoo, meanwhile, recently reported ad growth at a rate below the rest of the burgeoning industry.

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