AOL is trying to do all the right things with its technology. They opened up AIM for developers, with the hopes that new applications will bring more people to the rest of AOL’s services. When they had the opportunity to cover the Live 8 concerts online in 2005, AOL earned praise while MTV received jeers for its efforts.

The monthly search market figures from services like Hitwise, Compete, and Nielsen all tell an awful truth. AOL has a small single-digit share of the search market.

That translates to minimal paid search revenue, a situation that vexes Time Warner CEO Jeff Bewkes. Silicon Alley Insider picked up on Bewkes’ frustration at a Bear Stearns conference where Bewkes spoke.

He sees another flat quarter for AOL as its users continue to go where seemingly everyone else goes for search. Google dominates the US search market, depending on whose figures you choose to follow, by gobbling up as much as two-thirds of the queries being made.

Searching at Google made the search ad company a multi-billion dollar enterprise, fueled by relevant little text ads. If AOL could even pull one more percent of search share in a month, it would have a dramatic impact on their bottom line.

AOL has tried to advertise its search, and its web properties feature search boxes, yet the ubiquity of Google carries people back to it by inertia.

"This should significantly increase AOL’s strategic options," Bewkes told analysts on a conference call. Bewkes also said the company will cut costs, including a reduction of corporate spending by more than 15 percent and a cost reduction at Time Warner’s New Line film studio.

Bewkes said the company’s 84 percent ownership stake in Time Warner Cable is not a good situation for either company. He said there would be more definite plans for cable when Time Warner reports first quarter earnings at the end of April.

The chief financial officer, John Martin, said it will take "several more months" to separate the AOL businesses because it was complex. Martin said AOL’s costs "will continue to be reduced and advertising should continue to grow" beginning in the second quarter of 2008.

"The results of all this is that we continue to expect AOL to maintain its overall profitability on a considerable scale," he said.