for AOL today. The Internet company's revenues and
profit plunged with net income dropping to $34.7 million from $82.7
million. AOL's transition to an advertising-supported business model
has been closely watched by media and technology observers alike.
Whether deserved or not, the company continues to be dogged by bad press for its
star-crossed merger with Time Warner. Following today's reports, bloggers
are pondering the curse of AOL.
- There's Definitely a
Curse, writes Ryan Tate at Gawker: "To cut a deal
with the internet conglomerate is to invite epic disaster... It sold
instant-messaging service ICQ to the frighteningly
backed Russian firm Digital Sky Technologies for $187 million, well
under the purchase price... Then, of course, there was AOL's epically
billion merger with Time Warner... One wonders what sort of
acquisition premium Armstrong will have to pay the next time he wants to
do a deal, to overcome worries about the Curse of AOL."
Got to Turn This Ship Around, writes Henry Blodget at Business Insider:
"Despite huge cost cuts, AOL's Free Cash Flow tanked year over
year--dropping a sickening 55% ($153 million). This compares a revenue
drop of only 23%. Why did Free Cash Flow drop so much? In part because
much of the revenue that AOL is losing is wildly profitable, while the
revenue it's keeping is low margin. Specifically, the high margin
revenue AOL is losing is subscription revenue, which declined 28%
($90 million) year over year, and the search revenue, which fell
27%, or $45 million. Now, everyone knows AOL's subscription revenue is
collapsing. But what fewer people understand is that the subscription
revenue and search revenue are tightly linked, and they are both vastly
more profitable than AOL's media and ad network business."
the CEO a Break, writes Peter Kafka at All Things Digital:
"[Tim] Armstrong has had the job for a year, and didn’t start his
overhaul in earnest until last summer. So he still has a grace period
before investors expect to see results."
- AOL's Path Forward Tim Conneally at Beta News lays out
the company's strategy: "AOL is still in a period of recovery from its
spin-off from Time Warner Inc. and is attempting to streamline its
business into one driven almost entirely by advertising... This split
will shrink AOL's
workforce by 33%."
- Here's What They Should Do, advises
Nicholas Carlson at Business
Insider: "The company needs to find a growth engine, fast." He
recommends nine Internet companies that AOL should purchase. Among them
is the Curbed network, a "place to go for real estate." Carlson says
"With its local content, Curbed could also help AOL crack the local ad
market it's going after with its local blogs."
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