AOL Suffers Embarrassing Third Quarter

    November 9, 2007

When AOL laid off 2,000 people last month, some of them were understandably unhappy.  Those people are probably now feeling a bit of schadenfreude, however, because AOL isn’t doing at all well.

Time Warner’s stock has sunk by about $1.25 over the past two days.  Granted, $1.25 doesn’t sound like much, but it equals a loss of roughly 6.75 percent.  Also, although lots of companies see stock fluctuations that don’t necessarily reflect a change in their core business – Google’s stock dropped $40 yesterday, for example – this isn’t one of those cases.

A Time Warner report acknowledges that, in the third quarter of 2007, AOL’s overall revenues were down by 38 percent.  Subscription revenues suffered an even worse fall, plummeting by 56 percent.  Furthermore, as most people who are familiar with the AOL know, that last trend isn’t likely to reverse itself in the near future, which leaves the company in need of a quick substitute.

On that subject, the news isn’t all bad – Time Warner notes that losses were “offset partially by a 13% increase ($61 million) in Advertising revenues.”  Rumors about Platform A indicate that it will receive most of AOL’s attention in the future, too.

Still, the company’s not exactly a money machine in its current state.  Maybe the people who were fired are better off without it.