AOL first quarter sales nosedive 23 per cent

Struggling internet old guard AOL saw revenue and profits plunge in its first quarter, the company reported yesterday.

It said sales plummeted 23 per cent in Q1 to $664m. Ad revenues fell by 19 per cent to $354.3m, and subscriptions dropped 28 per cent to $282.7m.

Net income nose-dived 58 per cent to $34.7m for the first quarter compared with its 2009 Q1.

“AOL continues to make progress against our long-term objective of becoming an internet growth company. Our results highlight the accomplishment of our first goal in AOL’s turnaround which was to significantly reduce AOL’s cost structure,” said the firm’s chairman and CEO Tim Armstrong.

“While our restructuring had an impact on Q1 advertising results, we are encouraged by the advertising market’s recent strength. We are now entering the second phase of AOL’s plan which is to greatly improve the consumer experience, scale the advertising systems and teams, and aggressively pursue our strategy in the marketplace.”

The company said that international display ad revenue falls included $5.8m related to layoffs and restructuring in the UK and AOL’s winding-down of France and Germany operations.

AOL also blamed the “continued declines from Bebo” - which it bought for $850m just two years ago - and is now mulling either shutting down or selling on this year. ®