NEW YORK (AP) — Internet company AOL Inc. reported smaller net loss for the second quarter on Tuesday even though revenue fell. The year-ago results were weighed down by a huge accounting charge.
AOL's advertising revenue grew for the first time since 2008, in what CEO Tim Armstrong said reflects "another meaningful step forward in the comeback of the AOL brand."
The company has been working on turning its business around as demand for its old dial-up Internet service fades. To this end it bought the Huffington Post earlier this year for $315 million, along with the technology blog TechCrunch last year.
"We have cleaned up and simplified our operations," Armstrong told analysts in a conference call. "We're witnessing encouraging metrics in key growth areas and we're seeing the beginning of this manifest in our reported numbers."
Investors, though, weren't as impressed, and the company's shares dropped $2.31, or 15.3 percent, to $12.75 in morning trading.
They may have been focusing AOL's weaker-than-expected display advertising and search ad revenue in June. Chief Financial Officer Arthur Minson said AOL's search advertising trends "got a little bit weaker as we moved through the quarter."
AOL posted a net loss of $11.8 million, or 11 cents per share, in the three months that ended June 30. A year ago it lost $1.06 billion, or $9.89 per share. That was due largely to write-downs of $1.41 billion for the declining value of its assets and the sale of social networking site Bebo.
In the latest quarter, AOL booked special items totaling 15 cents per share. Excluding these, the company would have earned 4 cents per share.
Revenue fell 8 percent to $542.2 million from $592.2 million. Analysts had expected lower revenue of $535.1 million, according to a poll by FactSet.
Advertising revenue grew 5 percent to $319 million, helped by AOL's acquisition of Huffington Post.
Subscription revenue fell 23 percent to $201.3 million as fewer people paid to access AOL's waning dial-up service.