Proving its e-commerce prowess, America Online Inc. of Dulles yesterday announced net income of $160 million, or 13 cents per share, for its fourth quarter, up from $7 million (1 cent per share) during the same period last year.
AOL's revenue for the fourth quarter, which ended June 30, reached $1.4 billion, up 46 percent from the same quarter in 1998.
The company's fourth-quarter results included a $15 million charge related to the acquisitions of Spinner Networks Inc., Nullsoft Inc. and MovieFone Inc.
Net income for the full year was $762 million, compared with a net loss of $74 million in 1998.
Particularly impressive this quarter was AOL's revenue from advertising and commerce, which reached $233 million, up 86 percent from the same quarter last year. Total advertising and commerce revenue for this year hit $1 billion.
In fact, AOL said that in the fourth quarter alone it inked 33 marketing or e-commerce deals, each worth at least $1 million. Just a few years ago the situation was reversed; AOL was paying companies for their content.
"Less than three years ago, we were a single-brand company with one revenue stream," chief executive Steve Case said in a conference call. "Today we are a multiple-brand company with multiple revenue streams."
Across all the services, which include CompuServe, Netscape and ICQ, said Case, AOL reaches 63 percent of all Internet users in the United States.
"The quarter was strong on all fronts," said Paul Merenbloom, an analyst with Prudential Securities in New York. "The e-commerce deals were incredible."
Gary Arlen, a Bethesda Internet analyst, said now that AOL has built its massive subscriber base -- 17 million for the core AOL service and 2 million for CompuServe -- it has the manpower and momentum to command huge amounts of money for these deals.
Analysts did question AOL's strength in two areas this quarter: its ability to compete against companies that offer high-speed cable-modem access and the threat in Europe of free Internet services, which have in Britain significantly eaten away at AOL's market share. Earlier this week AOL announced a free access service in Britain. But Case dismissed suggestions that a U.S. free service might be coming. "There's no likelihood of us entering the U.S. with a free ISP offering," he said.
AOL faces much work to build a truly global enterprise, said Arlen.
Separately yesterday, AOL said it signed a multi-year deal with Chicago-based Ameritech Corp. to provide high-speed digital subscriber line Internet access to customers in five midwestern states. AOL also said it would join Ameritech in a cable-modem trial in Chicago later this year.
Arlen said it will be interesting to see how AOL will handle its growing power. "They are the ones to topple now," Arlen said. "They are the new Microsoft."
AOL's stock closed yesterday at $115.06 1/4, up $1.87 1/2, on the New York Stock Exchange.
Selected figures on AOL's performance for its most recent quarter vs. a year ago.
Fourth quarter 1998: $7 million
Fourth quarter 1999*: $160 million
Earnings per share**
Fourth quarter 1998: 1 cent
Fourth quarter 1999*: 13 cents
Number of subscribers
Fourth quarter 1998: 12.5 million
Fourth quarter 1999*: 17.6 million
Daily average usage per member (minutes)
Fourth quarter 1998: 42
Fourth quarter 1999*: 52
*Three months ended June 30, 1999
**Includes one-time charges
SOURCE: America Online