Time Warner's AOL unit delivered results in line with expectations Wednesday, but revenue in the first quarter was $1.3 billion, down 23 percent from $1.46 billion and operating profit fell 74 percent to $284 million from $1 billion a year ago.
AOL's results (see Time Warner statement) are closely watched as it's a player in the Microsoft-Yahoo scrum (all Microhoo coverage). AOL is floated as an alternative for Yahoo to fend off Microsoft. Meanwhile, if Microsoft walks it could buy AOL. After all, Time Warner, which is spinning off its cable television unit, would be more than happy to unload it. The larger question is whether AOL makes sense for Yahoo or Microsoft.
"We maintain our position that Time Warner would be better positioned for growth following a full divestiture of AOL," said UBS analyst Michael Morris in his earnings preview. AOL was in line with his estimates.
This ad figure indicates that last week's AOL rah rah session was designed to offset this poor growth rate.
AOL averaged 110 million monthly domestic unique visitors.