Feeds

AOL sings soothing profit lullaby to nervous investors

But advertising's going down the toilet, says shareholder

Choosing a cloud hosting partner with confidence

AOL has moved to quieten down investors after activist shareholders Starboard Value LP accused the web biz of making "staggering" losses in its traditional areas and sinking money in unproven new ventures.

Starboard has just bought a 4.5 per cent stake in the company, according to Reuters, and promptly criticised AOL for a crash in display advertising revenue and its investment in little enterprises, such as local journalism initiative Patch. AOL lost as much as $500 million last year in its display advertising business, an area where it faces stiff competition from Google and Facebook.

Responding today in the WSJ, AOL said it had cut costs, sold noncore assets and made "significant investments for our future" during the past two years.

AOL's share price today stands at $15.13, down from a yearly high of $24.91 in January.

Though AOL's content business was looking hopeful, said Starboard CEO Jeffrey Smith, investors still see their legacy dial-up internet businesses as the cash cow of the company, ascribing almost all of AOL's value to its 3 million dial-up subscribers.

"This valuation discrepancy is primarily due to the company's massive operating losses in its display business, as well as continued concern over further acquisitions and investments into money-losing growth initiatives like Patch," he said in the missive.

Between the end of 2009 and 2010, AOL has seen revenues fall from $3.1bn to $2.3bn. This contributed to a reduction in the bottom line from a gain of $248.8m to a loss of $782.5m. ®

Internet Security Threat Report 2014

More from The Register

next story
Bono apologises for iTunes album dump
Megalomania, generosity and FEAR of irrelevance drove group to Apple deal
HBO shocks US pay TV world: We're down with OTT. Netflix says, 'Gee'
This affects every broadcaster, every cable guy
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
French 'terror law' declares WAR on the INTERNET itself, say digi-rights folks
Liberté, Égalité, Fraternité: Two out of three ain't bad
SCREW YOU, EU: BBC rolls out Right To Remember as Google deletes links
Not even Google can withstand the power of Auntie
Arab States make play for greater government control of the internet
Nerds told to get lost in last-minute power grab bid at UN meeting
Zippy one-liners, broken promises: Doctor Who on the Orient Express
Series finally hits stride, but Clara's U-turn is baffling
Don't bother telling people if you lose their data, say Euro bods
You read that right – with the proviso that it's encrypted
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Win a year’s supply of chocolate
There is no techie angle to this competition so we're not going to pretend there is, but everyone loves chocolate so who cares.
Why cloud backup?
Combining the latest advancements in disk-based backup with secure, integrated, cloud technologies offer organizations fast and assured recovery of their critical enterprise data.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.