And Online Display Impressions Soared as More Americans Checked Their AOL Accounts for Old Times' Sake

To hear tell from Time Warner executives, the company’s better-than-expected earnings for the first quarter owed quite a bit to gains in online-advertising market share by its AOL Internet division. During a conference call with analysts Wednesday, Dick Parsons, chairman and chief executive of Time Warner, said he was “very pleased” with the Internet service provider’s progress. “Our confidence in AOL keeps growing,” said Parsons. Which is an optimistic way of looking at things. Because while AOL’s operating income rose 27% during the quarter, it lost a hell of a lot of subscribers–1.18 million. That’s some ugly attrition, and it cost AOL the title of the leading domestic Internet service provider–a distinction it has held for more than a decade. AT&T is now the largest ISP in the United States and AOL isn’t the second largest, but the third. And with the cable and phone companies still aggressively growing their Internet businesses, one has to wonder how long AOL can hold onto that diminished ranking.