AOL third-quarter earnings more than double last year's after asset sales

By Steven Overly
Capital Business Staff Writer
Wednesday, November 3, 2010; 9:21 PM

The sale of assets allowed AOL to more than double its third-quarter earnings compared with last year, despite continued declines in the company's advertising and Internet subscription businesses.

The company's profits rose to $171.6 million, or $1.60 per share, in the third quarter of 2010 largely from to the sale of AOL's investment in the online travel site Kayak and its ICQ instant messaging program. That's a 132 percent climb from $74 million, or 70 cents per share, during the same period last year.

But the company has still lost $848.7 million during the first nine months of the year; chief executive Tim Armstrong repeated during a conference call with analysts that he expects the company's advertising business will rebound in 2011.

The company's balance sheets have been in flux since December of last year, when its split from then-parent corporation Time Warner became official. The company is in the midst of an overhaul as it looks to shake its history as an Internet provider and emerge as one of the Web's primary content creators and advertising platforms.

"This is the first time in a long time AOL has fully focused on playing offense," Armstrong said.

A string of acquisitions, product relaunches and asset sales have kept news coming from AOL every few weeks, most recently that the company had launched a new homepage and agreed to sell the east side of its former Dulles headquarters for $144.5 million.

If the Dulles sale is finalized in mid-November as expected, AOL's cash on hand will climb to $750 million. Armstrong said during the call that some of the money will be used for future acquisitions, particularly those that bring recognizable brands into AOL's suite of Web properties and enhance its technology platforms.

Arthur Minson, the company's executive vice president and chief financial officer, said acquisitions made during the third quarter provide insight into future buys. AOL spent $97.1 million at the end of September to pick up Silicon Valley blog TechCrunch, online video distributor 5min Media and small social-media company Thing Labs.

"The types of acquisitions you saw us do in the third quarter, where we brought brands into the company, technology into the company and talent into the company, I think those will continue to be the sweet spots where we focus," Minson said.

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