Peter Kafka

Recent Posts by Peter Kafka

AOL's Ad Turnaround Still Isn't Here Yet

AOL, which hasn’t always given the Street what it expects, delivered today: It reported Q4 earnings of 61 cents a share on revenue of $596 million. Analysts were expecting $588 million and 42 cents a share (or 52 cents, according to FactSet–AOL EPS estimates are usually all over the map). Wall Street was looking for an EBITDA of $145 million, and Tim Armstrong came through there, as well, with $149 million.

The bigger picture is that Armstrong’s turnaround is still in progress. Ad revenue was down 29 percent in the last quarter, though that number is worse than it looks. A big chunk of the decline comes from moves AOL has intentionally made that will cut revenue in the short run in return for more profitable sales down the road.

A more representative data set for Armstrong are his display ad sales, which are down 14 percent overall and 8 percent in the U.S..

The bad news is that the rest of the Web ad industry is well into rebound mode; the good news is that AOL has trained Wall Street to expect numbers like these. If you’re waiting to see positive sales numbers, Armstrong said during AOL’s earnings call this morning, wait until the second half of this year.


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I’m a giant vat of creative juices.

— David Pogue on why he’s joining Yahoo