Wall Street didn't have high expectations for AOL's quarterly earnings--after all, one of the company's executives exclaimed at a conference last week that "we have a big f-ing problem!"--but the Internet service provider turned new-media conglomerate still failed to meet the mark. AOL posted revenues of $584.1 million, a 26 percent decline from the previous quarter, when analysts were expecting about $602 million.
In an earnings release, AOL attributed the losses to slimmed-down search and advertising operations internationally, particularly in France and Germany, as well as to costs incurred by some properties which it has since sold off. In the past quarter, AOL sold flagging social network Bebo, which it had bought for an embarrassingly high $850 million in 2008, as well as chat client ICQ, and an investment in travel search site Kayak, which it sold for $19 million.
While domestic display ad revenues had ticked up slightly from the previous quarter, they were still down year-over-year. AOL's dial-up access business, long the bulk of its revenues, continued to shed subscribers and posted a 27 percent year-over-year loss.
"In the second quarter, we continued our efforts to successfully reposition AOL for growth and the company is getting healthier every day," chairman and CEO Tim Armstrong, who joined the company early last year following a high-profile role in Google's sales ranks, said in the earnings release. "Although we have much more significant goals for the future of AOL, we are pleased with this quarter's internal and external trends."