AOL Inc. posts billion-dollar loss after sales of Bebo, ICQ
Former Internet giant AOL Inc. posted a $1.06-billion loss Wednesday resulting largely from an accounting charge triggered by its recent sale of social networking company Bebo Inc.
AOL, which was spun off by Time Warner Inc. last year, is struggling to remake itself as an information and media hub as its decade-old dial-up business continues to erode.
Its ad revenue was down 27% since the same quarter last year. But the decline might have stemmed from a set of decisions that Wall Street likes, said Clayton F. Moran, an analyst at Benchmark Co. AOL has been selling off weaker advertising units as it steps up its efforts in higher-margin display advertising.
“The feeling is they've taken a lot of the right steps to become more focused,” Moran said. “They’re beginning to show signs that a turnaround is possible.”
AOL Chief Executive Tim Armstrong said company policies have made AOL stronger.“The company is getting healthier every day,” Armstrong said in a statement. “Although we have much more significant goals for the future of AOL, we are pleased with this quarter’s internal and external trends.”
Investors seemed to agree, as AOL stock jumped $1.63, or 7.7%, to $22.75.The loss stemmed from a one-time goodwill impairment charge the company had to take after its sale of Bebo for $10 million in June. It had bought the social network two years ago for $850 million.
In July, AOL also sold off ICQ, an online messaging service, for $188 million. It had acquired ICQ’s parent company in 1988 for $407 million.-- David Sarno
