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AOL posts $25.9m profit as advertising revenue grows

Mentions 45 percent tax rate
Thu May 09 2013, 12:30

INTERNET WALLED GARDEN AOL announced an impressive 23 percent jump in first quarter profits, though such is the state of the firm these days that it amounted to just $25.9m.

AOL, best known for supplying the world with plastic drinks coasters and offering walled garden internet access, has spent the last few years trying to position itself as an advertising broker by buying up high profile websites such as the Huffington Post. The firm's plan seems to be paying off with an increase in advertising revenues, putting overall first quarter 2013 revenues up by two percent to $538.3m and profits up by 23 percent to $25.9m.

AOL's relatively modest increase in revenue was due to the fact that its traditional internet subscription business saw revenues fall by nine percent to $165.8m, a number that many independent internet service providers might dream about. Overall AOL's advertising revenues on its own network and those through third party networks rose by eight and 10 percent, respectively.

Perhaps most surprising for a company of AOL's size is the firm's decision to pay a respectable tax rate. The firm said its effective tax rate was 45.6 percent, higher than the statutory US corporation tax rate of 35 percent, which the firm said was due to losses it suffered on foreign assets.

AOL CEO Tim Armstrong said, "Growth continues at AOL. AOL's strategy of being the first scaled media and technology company is clearly represented in our results today, and we will continue to aggressively drive the company toward near-and long-term growth."

Armstrong's strategy of growing advertising revenue through operating high traffic websites is slowly working, however a $25.9m profit for three months shows how far back AOL is compared to other internet firms that make money through advertising, such as Google, Facebook and Yahoo. µ


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