Profits More Than Double at AOL

Friday, July 21st 2000, 12:00 am
By: News On 6

SPRINGFIELD, Va. (AP) — With a burst of revenues from advertising and online commerce, America Online Inc. announced that it more than doubled its fourth-quarter profits and earned $1.2 billion for the year, beating analysts' estimates.

The Dulles, Va.-based company reported net earnings on Thursday of $338 million for the three-month period ending June 30. That's up 115 percent from $157 million in the year-ago quarter.

Earnings for the quarter were 13 cents per share, two cents higher than estimates by analysts surveyed by First Call/Thomson Financial and seven cents higher than quarterly earnings a year ago.

``This has been a record-breaking year for America Online, and we finished on a strong note,'' said AOL Chairman and Chief Executive Officer Steve Case.

Revenues for the quarter were $1.93 billion, up from $1.38 billion for the final quarter last year.

Despite the positive results, which were released after the close of regular trading Thursday, shares of AOL fell $2.125, or 3 percent, to $58.438 Friday morning on the New York Stock Exchange.

AOL still earns the bulk of its revenues from subscriptions, but advertising and other commercial revenue has been its fastest growing category.

Advertising and commerce revenues nearly doubled to $609 million in the fourth quarter, compared to just $313 million a year ago.

Bob Pittman, AOL's president and chief operating officer, said that only the four major broadcast networks rake in more advertising dollars than AOL.

Revenue from subscriptions increased 26 percent to $1.2 billion.

Over the last 12 months, the company added 5.6 million new members, including 992,000 in the last three months. The company's subscriber base now stands at more than 23 million.

Ken Kiarash, an analyst with Buckingham Research Group in New York, said he had expected advertising revenue to grow even faster.

``The figures looked pretty good ... but the sequential growth was slower than I expected,'' Kiarash said. ``I don't think advertising revenue has peaked yet; the issue is how fast they will be able to grow that line, which I think is crucial to this company's success.''

For the fiscal year ending June 30, AOL reported net earnings of $1.2 billion, or 48 cents per share. That compares to last year's net income of $754 million, or 30 cents per share.

America Online is the world's largest Internet provider. Earlier this year it announced plans to merge with Time Warner, the world's largest media company.

Federal and European regulators are still reviewing the proposed $136 billion merger. Shareholders from both companies approved the deal last month.

Case said he expects the merger to be approved in time for the companies to close the deal this fall.

``We are on track,'' he said. ``When people really look at the merger, it's big ... but it's unique in character. We're not increasing our market share in any category.''


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