AOL revenue slides 26% in 2010

American internet service giant AOL has reported a 26% drop in total revenue for 2010, tempered by a significant boost in profits for the final quarter.

AOL: revenue slides 26% in 2010
AOL: revenue slides 26% in 2010

In 2010 AOL brought in $2.4bn (£1.5bn) total revenue compared to $3.2bn (£2bn) in 2009. The company reported a net loss of $782.5m for 2010 compared to a profit of $248.5m the year before.

However the company was profitable in the final quarter, pulling in $66.2m net income compared to just $1.4m for the last three months of 2009.

AOL attributed this Q4 profit to reduced costs compared to the same period in 2009, "as operating costs including restructuring costs declined $259.3m year-over-year".

In 2010 advertising revenue dropped from $1.7 bn in 2009 to $1.3 bn, which also translated to a drop of 26% year on year.

Comparing the final quarters of 2010 and 2009, advertising revenue declined by $137m.

AOL blames the majority of this ($80.2m) on streamlining its services. The company said initiatives it had taken in 2010 to "optimize its product offerings" had an immediate negative effect on advertising revenue.

These include the sale of assets such as social-networking service Bebo and instant messaging service ICQ for $10m and $187.5m, the company said. 

AOL has made a number of acquisitions in recent months including the branded online video distribution network Goviral, which its European division bought for $96.7m (£60.9m).

In December last year AOL also took over start-ups in the form of content marketing company Pictela and personal profile company, for $31.4m net of cash required.

In September AOL acquired technology news blog TechCrunch, which was founded five years ago by Michael Arrington, for between $25m and $30m.

Tim Armstrong, chairman and chief executive, AOL, said: "I am very proud of what we accomplished in 2010 as we began the year with a significant restructuring of AOL and ended the year with a significantly improved balance sheet, a number of exciting new products and a new culture focussed on winning.

"We have set aggressive goals for ourselves in 2011 in pursuit of capturing the growing opportunity ahead of us".

Those goals include pageview targets for editorial content. Read more about them on Brand Republic's digital blog The Wall.

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