Call Steve Case the comeback kid.
Less than a year ago, some financial analysts bemoaned America Online Inc.'s continuing missteps and wondered how the online service would manage to improve service and put the breaks on user churn. Today the Dulles, Va., company reported record revenues for its first fiscal quarter, citing strong subscriber growth and decreased operating costs.
AOL reported net income of $19.2 million, or 16 cents per share, compared with a loss of $353.7 million, or $3.80 per share, in the same quarter last year. Revenues increased 49 percent to a record $521.6 million, company officials said. First Call earnings estimates were 13 cents per share.
"We are pleased to have made significant progress over the past quarter in building a foundation for sustained profitable growth," said Case, the company's CEO, in a statement. "Our strong increase in worldwide membership, combined with continued high member retention and careful management of costs, put us ahead of schedule to reach the 10 million member milestone."
During the quarter, the company reached an agreement to acquire the online service business of its main rival, CompuServe Inc. The transaction is expected to close in March.
The results also reflect a 4-cent-per-share gain related to the sale of Excite Inc. securities and to AOL's continued business relationship with Excite, company officials said.
Some 821,000 members were added worldwide during the quarter, bringing the total to more than 9.4 million members on Sept. 30.
Last week, the AOL network reached a new record of 500,000 simultaneous users, with peak usage tripling over the past year, AOL officials said. AOL's E-mail system now processes more than 20 million messages daily to 80 million recipients, officials said.
The company said its marketing expenses during the fiscal 1998 first quarter were reduced to $97.8 million, or 19 percent of revenues, from last year's $150.2 million on an equivalent basis, or 43 percent of revenues.