AOL display ad revenue grows for first time in three years, net income plummets

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AOL's global display advertising business generated $130.5 million in revenue for the first quarter of 2011, a 4% increase compared with the same period last year, and the first year-over-year growth since Q4 2007. US display advertising revenue rose 11% year-over-year to $122 million.

"Today represents an important milestone in the turnaround of AOL as global display revenue grew for the first time since Q4 2007," said AOL chairman and CEO Tim Armstrong, in an earnings call May 3. "I am proud of the work completed thus far, and we remain focused on accelerating our momentum through continued execution of our strategy to become the premier digital content company."

AOL's overall ad revenue fell 11% year-over-year to $313.7 million, with its international display advertising, as well as search and contextual advertising down 46% and 21%, respectively. The company attributed the decrease to reduced operations in Europe and the sales of social networking site Bebo and instant messaging client ICQ. AOL estimated these events cost the company $41.8 million, which would offset the $40.6 million revenue decline.

Net income also fell 86% from Q1 2010 to $4.7 million. AOL said the drop reflected expenses related to the first-quarter acquisitions of advertising video distribution network goviral and online news site The Huffington Post, as well as revenue decline.

The company reported $551.4 million in total revenue for the quarter, a 17% drop compared with the prior year, but an improvement on analysts' expectations, which were set at $535 million. The $67.3 million decline in revenue from AOL's Internet access subscription service posed the largest negative revenue impact. The total number of domestic subscribers fell 22% year-over-year to 3.62 million.
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