AOL: Down so long, it’s starting to look up

Editor’s note: This piece originally ran on It is being reprinted with permission.

Good news! For the first time in seven years, AOL’s revenue didn’t shrink! The company said Tuesday morning that it brought in $532 million in revenue last quarter, flat with the same quarter one year ago. Which is to say AOL still hasn’t seen any growth since 2005. Okay… maybe it’s not such great news after all.

But AOL investors are happy. They pushed the stock up as much as 16 percent Tuesday, after AOL reported its earnings and promised a $5.15 a share dividend this December, financed by the $1.1 billion deal to sell and license its patents to Microsoft. AOL also posted a net profit of 22 cents a share, versus a 2-cent loss a year ago. That profit was well above the 17 cents a share analysts were expecting.

After three and a half years as CEO, Tim Armstrong is starting to see some success in turning AOL around. This is a notable accomplishment for two reasons. First, turnarounds in the Web industry are as rare as they are difficult. More often, they result in a company merely treading water and not really reviving. Second, AOL’s turnaround was especially tricky because, for many years, its profits came from the aging dial-up subscription business that was a big business a dozen years ago.

Armstrong is making a lot of shrewd moves this year. He arranged the patent deal with Microsoft, giving AOL enough cash to buy back shares and offer a dividend. That won him the support of shareholders right in time to defeat a challenge by activist hedge fund Starboard Value. Armstrong has also succeeded in cutting some costs at AOL to shore up its profits.

Tech wrap: AOL talking merger with Yahoo?

AOL Chief Executive Tim Armstrong has reportedly approached private equity firms to gauge interest in a deal with Yahoo that would place Armstrong as the head of the combined company, according to a Bloomberg report.

CNBC later reported that a source close to Yahoo said the company had no interest in a deal with AOL.

AOL shares closed down 5.3 percent at $14.72 while Yahoo inched up 0.3 pct to $14.48.

Tech Summit Q&A, day 1: AOL’s Tim Armstrong, Arianna Huffington

AOL CEO Tim Armstrong and Editor in Chief of The Huffington Post Arianna Huffington joined us Monday for the premiere of the 2011 Reuters Global Technology Summit.

Here’s a clip of Tim Armstrong answering why he thinks the expansion of AOL’s local news service Patch is a sound investment.

And another clip of Tim Armstrong, this time talking about one of two Tech CEOs he admires:

David Eun Exits AOL after Huff Po purchase

david-eunAnother high-level AOL executive is heading for the exit door after the company shifted its content strategy again with the $315 million acquisitionof the Huffington Post. David Eun (pictured left), the ex-Googler recruited by AOL Chief Executive Tim Armstrong to be president of AOL media and studios, is leaving. Eun is a causality of the Huff Po purchase that put the charismatic high profile  founder Arianna Huffington in charge of AOL’s content.

In a memo to AOL employees posted on AOL’s technology blog TechCrunch, Eun described how he and Armstrong tried to find a place for Eun at AOL after the acquisition.

“I came to AOL last year to be the leader of the media organization. With the historic acquisition of The Huffington Post, my role and responsibilities as President, AOL Media are changing. Tim and I have discussed at length how I might continue within the new organizational structure, but ultimately there isn’t a role that matches what I am seeking to do.”

AOL aspires to be a 1990s publishing powerhouse; arms dealer

Tim Armstrong AOL

Tech nerds and gadget geeks over the age of 35 should have no trouble recalling the company Ziff Davis – a former publishing powerhouse home to such magazines as Computer World, PC Week and Red Herring. Ziff’s glory days were in the 1980s and 1990s and it scaled dizzying heights as its magazines groaned under the strain of advertising. Media observers would weigh issues of say Computer World for sport not unlike putting the September issue of fashion mags on the scales.

In 1995, a majority of Ziff was sold to SoftBank for $2.1 billion. Yet, Ziff’s storyline is familiar to a wide swath of Silicon Valley companies that prospered in the late 90s.  The tech bubble popped and by the late naughts Ziff Davis Media headed to bankruptcy court.

Ziff Davis is apparently on the mind of Tim Armstrong (pictured) . The AOL chairman and CEO invoked the company yesterday during his presentation at the Citigroup Media, Entertainment and Telecom conference.

UPDATE: AOL loses key editors; still says it’s home of premium content

AAOL_Say_CanvasOL is losing more key writers and editors, including the head of AOL News. Mike Nizza the editor in chief of AOL News is decamping for News Corp.   World editor James Graff is departing to take the managing editor position at The Week and James Burnett, AOL’s enterprise editor,  left for Rolling Stone.  Daily Finance Senior Writer Sam Gustin is headed to Wired.

It’s a blow to AOL which has boasted  of becoming an online media and entertainment powerhouse known for its premium content.

AOL emailed the following statement:  “We are building a world class organization and are committed to being a leading producer of high quality original content. And we are growing our organization everyday. ”

AOL and its Content Strategy

AOL turned 25 today, prompting Chief Executive Tim Armstrong to make the rounds with co-founder Steve Case to celebrate the milestone. AOL has a colorful and much chronicled history, which we won’t go into detail here. What is most interesting to this reporter is  not AOL’s  past but rather its plan to pitch itself forward  as a content company just at the point when traditional media — we’re  looking at you newspapers –  are undergoing wrenching operational changes.

All of this is to say that content, especially good local content, is expensive to produce even when the plug has been pulled from the printing presses.

Yet AOL executives believe there is a vein to mine and have been snapping up professional journalists while casting wide nets to capture “citizen reporters” eager to get their names out by covering the goings-on and activities at the neighborhood level. AOL is hiring expensive professionals to complement inexpensive user-generated content tied to search engine optimization. Ad dollars, the company hopes, should follow thanks to its technology platforms that AOL believes can maximize ad revenue.

The upside of shutting down Bebo for AOL

ArmstrongTIt might seem obvious to most observers that AOL would want to cut its losses and get out of Bebo sooner rather than later, especially after it confirmed yesterday it was evaluating strategic options for the struggling business (ie shutting it down or selling it).

AOL CEO Tim Armstrong (pictured, left) has been pretty indifferent about the fading social network’s prospects ever since he came on board last year  — though he did initially promise to hold on to it.

But Credit Suisse analyst John Blackledge points out in a client note that Bebo’s burdensome $850 million price tag at the time it was bought might serve some beneficial purpose for AOL after all:

Barry Diller’s take on Microsoft, Yahoo and more

Few in the media business know dealmaking better than Barry Diller.

So it comes as little surprise that the head of IAC/Interactive was asked about both the Microsoft-Yahoo deal and the AOL separation during an earnings conference call today. He sounded upbeat on both situations.

Here are some excepts:


One significant thing that happened is we’re not going have to talk about whether or not it’s going to happen anymore [Ed -Amen to that!]. Look, Microsoft will be able to report a greater share in terms of search and get — at least in some minds of the talkers — into being up there in competing terms with Google. And Yahoo doesn’t have to spend anymore money on search. As far as being able to execute, that is very complicated.

For us, I think that the significance is we want, need, must have at least two competitive forces, big competitive forces… I want to have two players out there wanting to get our incremental business, which is, of course, of real value to the companies.

AOL CEO: We still like TMZ and TMZ still likes us

AOL Chief Tim Armstrong has done several interviews with the press to mark the first 100 days in the role. In most of the articles he explains his focus on advertising primarily built around AOL’s collection of premium content brands.

No brand is more premium right now, in advertising terms, than, the Hollywood gossip website AOL jointly owns with Telepictures. Both AOL and Telepictures are units of Time Warner Inc.

TMZ is currently one of the hottest properties on the Web, especially after it was the first to break news of Michael Jackson’s death. In the Web advertising world it caused a bit of a stir by deciding to handle its own advertising sales rather than use the girth of AOL’s team.