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Spun-Off AOL Swings to Small Profit

Company gives first earnings report outside of the Time Warner bubble

AOL made its first quarterly earnings report since spinning away from the Time Warner bubble, turning a small profit that beat Wall Street’s low expectations for the struggling Web company.

Net income was $1.4 million during the fourth quarter, compared to a $1.96 billion loss during the same period in 2008.

AOL chief executive Tim Armstrong said he was “incredibly happy” with the results during a conference call with analysts – this despite axing roughly one-third of AOL’s workforce before the company’s official spin-off from Time Warner on December 9.

"We did everything possible to send signals to you guys that we’re serious about this business," he said.

Meanwhile, AOL’s former bread-and-butter – its subscription revenues — fell 28 percent as its U.S. subscribers declined 27 percent during the fourth quarter.

AOL’s focus now, Armstrong said, is to "create high-quality sites that are actually attractive" to advertisers.

Which will be tricky. The company said global display advertising revenue fell 3 percent during the quarter. In the U.S., however, it managed to grow about 1 percent.

When asked about rumors that AOL might sell some of its new media assets like Bebo or Mapquest, Arthur Minson, AOL’s CFO, said: "We have taken a complete review of the portfolio, and it’s likely that we will trade some assets away to the extent we can get a good deal."

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