ot 15:17 DJS America Online Posts Strong Earnings, Announces Stock Split
15:17 DJS America Online Posts Strong Earnings, Announces Stock Split
NEW YORK -(Dow Jones)- America Online Inc., the biggest online service
and a bellwether for the Internet and online industries, late Tuesday
announced better-than-expected earnings for its fiscal first quarter and
announced a 2-for-1 stock split.
AOL boasts more than 13 million members who log on to read e-mail, chat
with friends and surf the World-Wide Web for a monthly fee. AOL's revenue from
advertisements and electronic-commerce arrangements is mushrooming and the
firm has been branching out to other countries.
Dulles, Va.-based AOL (AOL) said net income came to $108.4 million, or
39 cents a share on a fully diluted basis, compared with $31.7 million, or 13
cents a diluted share, in the year-earlier period. Revenue increased 65% to
$858.1 million.
There had been speculation that AOL would announce a stock split, The
company's shares settled at $120.50 Tuesday, up from about $65 when the
company last split its stock in March.
The growth came despite higher "goodwill" costs tied to recent
acquisitions of Mirabilis Ltd. and NetChannel Inc. Under pressure from the
Securities and Exchange Commission, AOL moved to write off less of the cost of
those deals through upfront, one-time charges than it had initially planned in
the fiscal fourth quarter. This has forced AOL to amortize more of the cost of
the acquisitions over future quarters - starting in the first quarter - as
goodwill. Goodwill represents the premium paid over the fair-market value of
an acquired company's assets.
Earnings were also held back by heavy spending on marketing. AOL has
been promoting and upgraded version of the software used to access its service
and, to a lesser degree, the newest version of CompuServe, which AOL acquired
earlier this year.
AOL last month kicked off a new deluge of AOL's most famous - some say
infamous - marketing device: free disks. The CD-ROMs contain AOL 4.0, an
update of the service's software. When installed on a personal computer, the
software allows a consumer to sign up for AOL and have the subscription
automatically billed to a credit card.
By creating a bigger audience, the company can bring in more revenue
from advertisements shown on the service and potentially increase demand for
goods and services sold through electronic-commerce arrangements. But now that
AOL has exhausted the ranks of technology-loving early adopters, it faces a
tougher sell with new users. AOL says its new 4.0 software is significantly
easier to use and install, and therefore has a better chance of retaining
technophobic consumers.
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(:AOL)
10/27 3:17p CST |
