AOL's Q4 revenue plummets, drags down Time Warner

AOL's revenue fell 23 percent in the fourth quarter.

AOL's revenue fell 23 percent in the fourth quarter, including a steep decline in ad sales, as the Time Warner online unit continues to post disappointing results.

Revenue dropped to US$968 million in the quarter ended Dec. 31, 2008, from $1.25 billion in 2007's fourth quarter, Time Warner said Wednesday.

Revenue from Internet access subscriptions -- a business AOL has been phasing out for years -- fell 27 percent. More concerning is the 18 percent drop in ad revenue, AOL's primary business.

After a US$2.2 billion asset writedown, AOL had an operating loss of $1.9 billion, compared to operating income of $274 million in 2007's fourth quarter.

For the full year, AOL's revenue fell 20 percent to US$4.2 billion compared with 2007. Subscription revenue dropped 31 percent and ad revenue shrunk 6 percent. AOL also posted an operating loss of $1.1 billion, compared with operating income of $2 billion in 2007.

Last week, AOL announced plans to lay off 700 employees -- 10 percent of its staff -- this year.

Time Warner also disclosed that last week, Google informed it of its desire to liquidate its ownership stake in AOL through a request to exercise its "demand registration rights." That means Google, as an investor, is asking Time Warner to take AOL public.

"We're reviewing what we received and we're evaluating our options," said Time Warner's CFO, John K. Martin, during a conference call Wednesday to discuss the financial results. "Those options include proceeding with the request, delaying the decision for some time or moving ahead to potentially buy back Google's stake."

If Time Warner decides to buy Google's AOL stake, it would do so "at an appraised value which would be well below the value it was placed on at the time of the original investment," he added.

In December 2005, Google announced it would buy a 5 percent stake in AOL for US$1 billion, and that AOL would extend its agreement to use Google search technology and carry Google search ads for an additional five years.

However, AOL's fortunes have fallen considerably since then, and Google announced last month that it would write down the value of its AOL stake by US$726 million.

Google spokesman Andrew Pederson confirmed Martin's statement. "After careful consideration, we made the decision that we needed to exercise our rights now so we could be in a position to sell our interest when the timing made sense for us," he said via e-mail. "AOL remains an extremely valued partner, and we'll continue to work closely together to provide their users with the best search experience possible."

As a whole, Time Warner saw its fourth quarter revenue decline 3 percent to US$12.3 billion, dragged down mostly by its AOL, films and publishing units.

Time Warner posted a net loss of US$16 billion, or $4.47 per share, compared with net income of $1 billion, or $0.28 per share, in 2007's fourth quarter. The net loss includes a previously-announced $24.2 billion write-down of the company's AOL, cable and publishing assets.

For the full year, Time Warner grew its revenue 1 percent to $47 billion, but posted a net loss of $13.4 billion, or $3.74 per share, compared with net income of $4.4 billion, or $1.17 per share.

Join the newsletter!

Error: Please check your email address.
Rocket to Success - Your 10 Tips for Smarter ERP System Selection

Tags AOLtime warner

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Juan Carlos Perez

IDG News Service
Show Comments

Cool Tech

SanDisk MicroSDXC™ for Nintendo® Switch™

Learn more >

Breitling Superocean Heritage Chronographe 44

Learn more >

Toys for Boys

Family Friendly

Panasonic 4K UHD Blu-Ray Player and Full HD Recorder with Netflix - UBT1GL-K

Learn more >

Stocking Stuffer

Razer DeathAdder Expert Ergonomic Gaming Mouse

Learn more >

Christmas Gift Guide

Click for more ›

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Edwina Hargreaves

WD My Cloud Home

I would recommend this device for families and small businesses who want one safe place to store all their important digital content and a way to easily share it with friends, family, business partners, or customers.

Walid Mikhael

Brother QL-820NWB Professional Label Printer

It’s easy to set up, it’s compact and quiet when printing and to top if off, the print quality is excellent. This is hands down the best printer I’ve used for printing labels.

Ben Ramsden

Sharp PN-40TC1 Huddle Board

Brainstorming, innovation, problem solving, and negotiation have all become much more productive and valuable if people can easily collaborate in real time with minimal friction.

Sarah Ieroianni

Brother QL-820NWB Professional Label Printer

The print quality also does not disappoint, it’s clear, bold, doesn’t smudge and the text is perfectly sized.

Ratchada Dunn

Sharp PN-40TC1 Huddle Board

The Huddle Board’s built in program; Sharp Touch Viewing software allows us to easily manipulate and edit our documents (jpegs and PDFs) all at the same time on the dashboard.

George Khoury

Sharp PN-40TC1 Huddle Board

The biggest perks for me would be that it comes with easy to use and comprehensive programs that make the collaboration process a whole lot more intuitive and organic

Featured Content

Product Launch Showcase

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?