) is riding high after a strong earnings report and upgrade by
The New York Internet firm finished the fourth quarter with an
EPS of $0.41. This was on par with analysts' expectations. The
company nearly doubled EPS on a year-over-year basis, as it
finished with $0.23 in the fourth quarter of 2011.
Revenue came in higher than expected for the quarter. Wall
Street anticipated $574 million while AOL finished with $599.5
million. Also, revenue rounded out higher than during the fourth
quarter of 2011, marking the first year-over-year increase in
EPS was over 93 times higher than the previous year, finishing
at $11.21 as compared to $0.12 in 2011.
For the year, revenue was about even, finishing at $2.19
billion as compared to $2.2 billion in 2011.
AOL's advertising category finished the quarter at $410.6
million, topping Q4 2011 by 13 percent.
For the year, this category rounded out at $1.42 billion - an
eight percent jump from 2011.
Subscription revenue was down over 10 percent during the
fourth quarter, finishing at $174.2 million as compared to $194.6
million during the same period in 2011.
It was also down for the year by 12 percent. After finishing
2011 with $803.2 million in subscription revenue, AOL rounded out
2012 with $705.3 million in this category.
People Still Use AOL
In the 1990s, the dial-up Internet was all the rage, with AOL
being synonymous with the Internet itself. However, as broadband
began to spread, AOL faded as the top dog in this arena. Yet,
nearly 2.8 million people still change the oil, take a shower or
go grocery shopping while web pages load by using AOL's dial-up
The number of subscribers is steadily dwindling, down 15
percent year-over-year. However, based on
statistics provided by Leichtman Research
, AOL has more subscribers than all but the top five broadband
companies and has about as many as the next four (Suddenlink,
Mediacom, Insight and Cable ONE) combined.
You've Got an Upgrade
Due in part to the successful earnings release, RBC Capital
has upgraded AOL from Sector Perform to Outperform.
RBC Capital noted that the company's current valuation is
still reasonable. It also believes that AOL's revenue growth
turnaround is still in its early stages. Additionally, RBC
Capital believed AOL can cut expenses even further. Finally, RBC
Capital noted that AOL continues to return cash to shareholders
and has authorized a $100 million share repurchase.
AOL has had a steady share price since the beginning of
December, 2012. The stock has hovered in the $29 to $32 range for
the entire period.
However, the successful earnings release and RBC Capital
upgrade have sent the stock upward in trading on Monday. As of
this writing, AOL has eclipsed $36 - the first time it has done
so since the end of November.
AOL is up around 7.5 percent on Monday.
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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