What I am reading:
AOL reported another lousy quarter this morning. Even ignoring the $1.4 billion goodwill charge, revenues were down 26 percent and cash from continuing operations was down 44 percent (as was free cash flow). What we are seeing is a very messy transition as AOL shifts multiple lanes from an online subscription business to an advertising one, and at the same time to a new online content production model. AOL CEO Tim Armstrong is making this transition in the glare of being a once-again publicly traded company—and public investors are not a patient bunch.
Let’s break down the numbers. In the second quarter, AOL reported total revenues of $584 million, down from $792 million a year ago. We all know that AOL’s Internet access subscription business (including dial-up and bring-your-own broadband customers) is going away. And revenues for that portion of AOL’s business declined by $96 million. AOL is down to 4.4 million subscribers, and is losing 2.6 percent a month. But AOL’s advertising business, which is supposed to be its engine going forward, did even worse. Its revenues declined by $110 million.
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