Congrats all around on this stock and to all who are holding. Here is an article from todays WSJ, which is possibly the most positive I have ever seen on a company.
enjoy!!
AOL Trounces Earnings Forecasts
As Firm's Net Profit Quadruples
By KARA SWISHER
Staff Reporter of THE WALL STREET JOURNAL
America Online Inc. beat Wall Street expectations for its fiscal second
quarter, reporting strong earnings and revenue growth thanks to a robust
rise in holiday electronic commerce and a surge in its member base.
The company also announced a 2-for-1 stock split and an important
advertising deal with Procter & Gamble Co.
AOL's net income quadrupled to $88 million,
or 17 cents a diluted share, from $20 million,
or four cents a share, in the year-earlier
period. The consensus estimate of Wall Street analysts was 14 cents a
share.
Revenue for the Dulles, Va., online service jumped 62% in the period
ended Dec. 31 to $960 million from $592 million. In New York Stock
Exchange composite trading, its shares climbed $10.50, or 6.8%, to close
at $165.50. AOL reported the results after markets closed Wednesday,
but in after-hours trading the stock hit $167, according to Instinet Inc.
AOL membership, too, surged in the quarter, with 1.6 million new
members joining the service. That brings the total subscriber base to 15.1
million members, who typically pay a monthly fee of $21.95 to use the
service. That figure doesn't include the CompuServe division's two million
paying members, or the tens of millions of people who use a variety of free
AOL properties such as ICQ, a Web-based chat service.
"I think we have shown great results across the board," said Steve Case,
AOL's chairman and chief executive officer. "There's lots of momentum
and steady progress, which is why I think we have become a blue-chip
company in the Internet sector."
Higher Margins
Mr. Case said over the past several quarters the company displayed a
discipline that allowed it to improve margins -- operating margins rose to
13.6% from 12.9% in the previous quarter, while gross margins rose to
38.5% from 36.4%. That improvement occurred in spite of slightly higher
marketing expenses, which accounted for 14% of revenue compared with
12.2% in the first quarter.
Mr. Case said he was heartened by
an increase in AOL's advertising and
electronic-commerce revenue, which
climbed 22% to $126 million from
the previous quarter's $103 million.
That gain in revenue, however, lags
behind the increases reported by
rival Yahoo Inc., which saw its
advertising and electronic-commerce
revenue rise 38% during the period.
AOL's revenues in those areas are
likely to improve with the ad deal
with consumer-products giant P&G and other major advertisers AOL
expects to attract. Mr. Case said that more traditional companies like
P&G, which haven't been active online, are beginning to see the benefits of
advertising on the Internet. "They have a greater sense of urgency about
moving into this space," he said.
P&G Deal
The deal with P&G, which was announced to analysts by AOL President
Bob Pittman in a conference call after the earnings were released, is a
bellwether. A P&G spokeswoman confirmed the company has "entered
into a relationship" with AOL, but declined to give terms of the deal. P&G
said last year it had spent $3 million on Internet advertising during one
quarter, prompting speculation that the company's annual Internet spending
could top $12 million.
P&G said the first ads appearing on AOL will be the company's Scope
Send-a-Kiss campaign prior to Valentine's Day. The campaign uses a
pop-up box that users can click on and send an e-mail "kiss" -- a message
and animated lips dancing across the screen. "We've made a media buy"
with AOL, said P&G spokeswoman Gretchen Briscoe. "Beyond that we'll
work with AOL to figure out new and innovative approaches to marketing
online specifically within the AOL network."
Subscription fees still made up the bulk of AOL revenue, increasing to
$779 million in the quarter, or 81% of total revenue. AOL said its
members had increased their average daily usage of the service to 48
minutes from 41 minutes a year ago.
Separately, AOL also said it had signed a $13 million, multiyear deal with
fast-growing Qwest Communications International Inc., which provides
high-speed access services. The deal follows a lot of activity by AOL in its
most recent quarter: announcing the acquisition of Netscape
Communications Corp., a rollout of high-speed access with Bell Atlantic
Corp. and a major content deal with broadcaster CBS Corp.
Mr. Case said the acquisition of
Netscape is moving ahead and
should be completed in the early
spring. The company recently
scored a coup by hiring Netscape
co-founder Marc Andreessen as its
chief technology officer, a move that
is likely to boost morale and
retention among Netscape
employees in Mountain View, Calif.
But AOL also cut some longstanding
ties, shedding its 9.5% stake in
Excite Inc., which announced on Jan. 19 that it will be acquired by AOL
competitor At Home Corp. AOL sold 4.9 million Excite shares for $100
each on Jan. 20, according to a filing it made with the Securities and
Exchange Commission Wednesday. The sale yielded AOL $500 million,
boosting cash and short-term investments to $2 billion. Company officials
said the money will be used for other acquisitions and improvements to the
service.
Analysts seemed buoyed by AOL's results, which were stronger than
expected.
"They have shown they still have a lot of leverage in their model," said
Henry Blodget, an analyst with CIBC Oppenheimer in New York. "This is
one of the strongest quarters they have shown and displays a real
momentum."
The stock split -- coming only months after the company's most recent
stock split, in mid-November -- could further that momentum, said Mr.
Blodget.
AOL said Wednesday that on Feb. 22, stock of record Feb. 8 will receive
one additional share for every share they own. After the split, its sixth since
its public offering in 1992, AOL will have 933 million shares outstanding.
--Tara Parker-Pope contributed to this article. |
