AOL Posts Billion-Dollar Quarterly Loss

Revenue falls 26 percent as company continues turnaround attempt

Last Updated: November 3, 2010 @ 10:05 AM

AOL posted a billion-dollar second quarter loss on Wednesday, hit by an impairment charge as it struggles to reverse its sinking fortunes outside of the Time Warner bubble.

The company lost $1.06 billion, or $9.89 a share, during the quarter, compared with net income of $153.7 million, or 86 cents a share, a year ago.

The Web company’s revenue fell 26 percent to $584.1 million. AOL attributed the slide to a drop in advertising. (Overall, its ad revenue fell 27 percent to $260.2 million.)

AOL incurred a goodwill impairment charge of $1.4 billion related to the sale of its Bebo unit, the social network it offloaded during the quarter.

While Wall Street did not expect much from AOL, the report fell short of analysts’ expectations, which had about $20 million more in revenue – and did not follow the positive quarterly results turned in recently by Google, Yahoo and Microsoft.

Despite all of this, AOL chief Tim Armstrong said he is “pleased” with the trends.

"In the second quarter, we continued our efforts to successfully reposition AOL for growth, and the company is getting healthier every day," Armstrong said. "Although we have much more significant goals for the future of AOL, we are pleased with this quarter's internal and external trends."

Time Warner spun off AOL in December.

In June, AOL announced an original content strategy that would include the hiring of "hundreds" of journalists. David Eun, AOL’s relatively new president of its media and studios division, told Ad Age:  “We are going to be the largest net hirer of journalists in the world next year."

It remains to be seen if Wall Street will wait that long.