Time Warner: AOL's revenue slide continues

This was originally posted at ZDNet's Between the Lines.

Time Warner's first quarter was weighed down by its AOL unit, which saw revenue fall 23 percent. Time Warner CEO Jeff Bewkes reiterated that the company is looking for "the right ownership structure for AOL."

Here's why: AOL reported first-quarter revenue of $867 million, down 23 percent from a year ago. Subscription (dial-up) revenue fell 27 percent, and advertising sales declined 20 percent. Both declines were expected, and AOL noted that ad sales were weak in all categories (ad networks, display, and search).

Operating income for AOL fell 47 percent to $150 million, which included restructuring costs of $58 million. AOL also ended the quarter with 106 million average U.S. unique users. AOL's dial-up business had 6.3 million subscribers, down 2.4 million from a year ago and 570,000 from the fourth quarter.

Time Warner has been trying to unload AOL and reportedly may attempt a spin-off. AOL recently named former Google exec Tim Armstrong as its CEO to right the ship. There are options: Time Warner could spin off AOL or sell its dial-up business to an outfit like EarthLink.

A closer look at Time Warner's business units.

(Credit: Larry Dignan/ZDNet)

Simply put, AOL and Time Warner's publishing unit, which had an operating loss of $32 million, are dead weights on the company's overall earnings. Time Warner reported first-quarter net income of $661 million, or 55 cents a share, compared to $771 million, or 64 cents a share, a year ago.

Adjusting for investment gains and charges, Time Warner reported earnings of 45 cents a share on revenue of $6.9 billion, down 7 percent. The media giant had a bevy of moving parts--1 for 3 reverse stock split and Time Warner Cable dividend. Wall Street was expecting earnings of 38 cents a share.

Time Warner also reaffirmed its 2009 outlook of flat adjusted earnings of $1.98 a share relative to 2008.

[monkeyfun14]

People still use dial up? That's so 90's

[MrBoomshadow]

Unfortunately, DSL and other broadband solutions have yet to reach some rural areas because of the cost of build-out.

[sharmajunior]

WHo da Haell uses AOL service.
Its the biggest fraud ever. You start from dialup, then you upgrade to broadband and they tell you, keep the service (only $30 a month) and pay for broadband as well. Who is stupid enough to do that. Plus has anyone tried getting rid of that thing once its installed. My god, it hides in places where even the aliens wouldn't find it..LOL

[Angmarr]

"it hides in places where even the aliens wouldn't find it" (sharmajunior April 29, 2009 6:03 AM PDT)

ya seriously, how many F- ing AOL folders need to be on the system!?

[sharmajunior]

have you tried uninstalling it?...Alright, the alien part was a joke, if you didn't find it funny too bad.

But if you try uninstalling it, then go back into program files and the windows folder, you'll find its aftermath/remains. It just doesn't go away that quickly. Being such a big company that Time Warner is, one would assume that they would have the sense to hire people who can create proper programs and one's that don't F-ing take over the system.

[Angmarr]

naa dude the Alien part is spot on,

ya Ive uninstalled it, but still found a buncha folders lol

[Gambit642]

AOL had proven time and time again, it doesn't belong the ISP market. At least Cox, Comcast and Verizon have an infrastructure they utilize. AOL hasn't done anything innovative in over a decade.

"Shhhhh.....its okay. Stop fighting...embrace the end."

[Pointedly]

Hopefully, any corporation purchasing AOL will realize that AOL should cease to exist as an ISP. Until NetZero came along, AOL had always been the worst ISP. Now AOL and NetZero are tied. The world would be better off without either company.

[jscott418]

AOL is way behind the curve of reinventing itself. I think the party is over and it needs to go away. Several things it should have done early was to drop dial up and become a portal only and concentrate on advertising. It never happened. MSN is suffering the same fate although it has handled it better beause of Microsoft's deep pockets and better upgrades to the service. AOL has not been a priority for Time Warner and I am confused as to why they even own AOL. Maybe they just can't find a buyer?

[cp256]

I'll be happy to see AOL cease to exist. I have always hated them, they have been a pox upon the internet since they linked to it.

[JCPayne]

AOL had a smart business model. The pitched towards the people who were ignorant of the Internet and made those people believe they wouldn't last without AOL. Anything that was popular (at the time) on the Internet, the AOL folks bought out. iCQ, WinAMP, Mapquest. But as said AOL sat on their properties and stagnated. The last popular thing to come out of AOLs finantial warchest was Mozilla/Firefox.