Peter Kafka

Recent Posts by Peter Kafka

AOL Beats Estimates, Posts Another Ad Sales Increase. But About Those Domestic Numbers …

Here’s a first look at AOL Q3 earnings: Revenue of $532 million and an earnings loss of $0.02 per share. Wall Street estimates for the company tend to be all over the map, but Yahoo Finance thinks the consensus was $524 million and a loss of $0.06 per share.

But Wall Street will quickly scrutinize the breakdown of CEO Tim Armstrong’s sales performance. Last quarter, the company posted a 5 percent ad bump, but investors hated the details: Much of the growth was coming from the company’s low-margin network business, in addition to gains from its HuffPo and TechCrunch acquisitions.

What Wall Street really wants to see (or at least what it wanted to see last quarter) is organic growth in the company’s core display business, and improving earnings.

Overall, AOL’s ad sales are up 8 percent, and display is 15 percent. Investors might raise an eyebrow over the fact that domestic display growth of 14 percent is a sequential decline from last quarter’s 16 percent rise, though. And bear in mind that these numbers include both TechCrunch and Huffington Post boosts. Also worrisome — a mere 1 percent increase in the company’s owned and operated properties — again, that’s after accounting for those two big acquisitions. (Click image to enlarge.)

 

Another flag for AOL: Even though it has added TechCrunch and the Huffington Post over the last year, traffic to AOL’s own sites has barely budged: A year ago, AOL attracted 106 million monthly unique visitors to its sites; this year, the total only moved up to 107 million.

AOL earnings call starts at 8 am ET, and beyond this morning’s release, investors will also want to hear what Armstrong is seeing in the ad market in general. Until recently, digital ads have been booming for just about everyone except for AOL and Yahoo, but recently we’ve heard about softness/slower growth making its way to the Web, too. (Though no sign of that from Google.)

And, of course, Wall Street will also want to see if Armstrong has anything to say about eternal speculation that he wants to link up with Yahoo itself.

 


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There’s a lot of attention and PR around Marissa, but their product lineup just kind of blows.

— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google