November 5, 2013 Last Updated 8:00 am

AOL reports total revenue up 6%, Brand Group up 9%, profits down due to cost of Patch layoffs

The former darling of the Internet bubble days, AOL today reported Q3 earnings. The company was able to report good revenue growth of 9 percent in its Brand Group, and the usual decline in the Membership Group (AOL subscriptions).

Earnings, though, were down – due almost exclusively to the costs of those Patch layoffs. Pre-tax restructuring costs were $19.0 million, and there was an additional $25.0 million related to ‘non-cash asset impairments’ in the Patch operations. (Got to love CFO talk.)

The bright spot for AOL was third party network advertising which grew 32 percent due to the acquisition of “With the addition of, AOL’s leadership position in digital video is further solidified,” AOL’s chairman Tim Armstrong said in September of the acquisition. “AOL is well positioned to capitalize on two clear trends in the video space – the movement of advertising dollars from linear to online video and the shift from manual transactions to programmatic media buying.”

Patch, AOL’s attempt at breaking into the local news market, was not mentioned much in the earnings report, other than as an expense. It appears that the effort is being trimmed back to a manageable, minor unit that can be largely ignored by analysts in the conference call, eliminating a major annoyance for AOL’s management team.



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