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AOL is doing just fine, thank you
July 19, 1996
AOL was trading just over 30 on the Nasdaq market, down more than 3-1/4 points from its opening at 33-3/8 this morning. The blackout and subsequent stock drop overshadowed the company's financial reports earlier this week, which showed a strong gain in fourth-quarter earnings but revenue that fell below some analysts' predictions.
AOL took an $8 million charge for a settlement of its past billing practices. The company also said it earned $16.1 million (or 14 cents per share) for the three months ended June 30, up from income of $5.3 million (or 6 cents) for the period a year ago. Quarterly sales jumped to $334.5 million from $151.9 million.
The company ran into criticism of the way it posts billing rates from some consumers and state attorneys general, but it has since resolved the problem. Analysts have also expressed concern about AOL's "churn" rate--the addition of new subscribers against those that withdraw--and a slowdown in membership growth. Nonetheless, chief executive Steve Case said he was bullish about the future.
Case said the company expected to add "several hundred thousand new members this quarter." He predicted that the largest online service would hit the 10 million mark within the next year, compared with the current 6.2 million members.
This quarter, the company is rolling out upgraded service software, and it will "relaunch" in the fall to make it more user-friendly. Since its founding in 1985, AOL has become the first $1 billion-a-year interactive services company.
For the full year, AOL earned $29.8 million (28 cents per share), compared with a loss of $35.7 million (51 cents). Full-year sales rose to $1.1 billion from $394.3 million.
