LTW and From Wire Reports
AOL posts huge 2Q loss on accounting charge
SAN FRANCISCO, Calif. – AOL Inc. reported a $1 billion-plus loss for the second quarter on Wednesday because of charges for a decline in its share price and the sale of properties such as social networking site Bebo and instant messaging service ICQ.
The New York company is in the midst of a turnaround effort under CEO Tim Armstrong, who is looking to shift AOL from relying on a shrinking dial-up Internet business to finding growth in online ad sales.
But since splitting from Time Warner Inc. in December, the company has shown few concrete signs of progress.
The latest quarterly results showed advertising revenue fell at an even quicker rate than in the first quarter. And its subscription dial-up Internet business continued to erode.
The company reported a net loss of $1.06 billion, or $9.89 per share, in the April-June period. That included $1.4 billion in write-downs on the Bebo sale and declines in AOL’s share price.
AOL had reported net income of $90.7 million, or 86 cents per share, in the second quarter a year ago.
In an interview, Armstrong said that the goodwill charge doesn’t point toward problems at AOL, but rather indicates that "the patient is getting healthier."
"If you look underneath it, it’s really about cleaning up what happened during the AOL-Time Warner years," he said.
AOL bought Time Warner at the height of the dot-com boom back in 2001, hoping that Time Warner’s TV and magazine content would fit with AOL’s dial-up Internet business. But the rise of speedier broadband Internet connections started killing off AOL’s main revenue source. After years spent trying and failing to integrate the two companies, Time Warner Inc. finally spun off AOL.
The change has not been easy, and AOL’s second-quarter revenue is the latest indication that the company still has much work to do as it works to turn itself around. In the April-May quarter, AOL’s revenue fell 26 percent to $584.1 million from $791.5 million a year ago. Analysts surveyed by Thomson Reuters expected higher revenue of $602.1 million, on average.
Advertising revenue fell by 27 percent to $296.9 million. Armstrong said much of this decline stemmed from AOL’s efforts to get rid of ad products and operations that may be contributing to its revenue but not to its profit.
Overall, he said, the online advertising market is recovering from last year’s slump, and he expects next year to be even stronger than this one.
"I think our results are a reflection of what we’re doing to make AOL a healthy company, rather than what’s happening in the industry," he said.
Meanwhile, revenue from AOL’s subscription dial-up Internet business also fell 27 percent to $260.2 million. This business has steadily declined for years as consumers gravitate to speedier broadband Internet services.
Despite the large quarterly loss and drop in revenue, Armstrong remained resolute about AOL’s chances for survival, saying he believes the company has "moved the needle from ‘survive’ to ‘thrive’" in the past year.
Clayton Moran, a Benchmark Co. analyst, echoed Armstrong’s positive take on the quarter, saying that while AOL faces plenty of challenges it looks much better than it did a year ago.
"I think you’re beginning to see through all the reshaping and reorganization of the company; you’re beginning to see a little light at the end of the tunnel," he said.
AOL shares rose 50 cents, or 2.4 percent, to $21.62 in midday trading.
Dish to stream live TV on iPad, other devices
PHILADELPHIA, Pa. – Dish Network subscribers will soon be able to watch live satellite TV on their mobile devices at no extra cost.
Dish Network is planning to offer the feature on the iPad, iPhone, iPod Touch and BlackBerry devices in September and on phones using Google Inc.’s Android system in October.
Subscribers will need special hardware. One option is Sling Media Inc.’s SlingBox, which retails for $180 to $300. Dish subscribers can also pay $200 to $400 to upgrade to Dish’s high-definition digital video recorder with SlingBox features. They’ll need to pay $10 a month for multiple DVR service, but they’ll get recording capabilities with it.
The offering from Dish is the latest in the race for video supremacy among subscription TV providers. With most TV viewing households already signed up for a cable, satellite TV or video service from a phone company, companies have to step up promotions to lure subscribers.
Vonage makes free Facebook phone call app
NEW YORK, N.Y. – Vonage, a pioneer of home phone service over the Internet, has a new application for the iPhone and Android phones that provides free calls between Facebook users.
The application is another step in the industrywide move away from today’s phone system and its numbers and toward Internet calling.
Vonage Mobile for Facebook is available as a free download for iPhone, iPod Touch and Android phone users. They sign in with their Facebook username and see a list of Facebook friends who also have the app. Tapping a name places a call to the friend, whose phone rings. The app doesn’t need to be running on the friend’s phone for the call to go through.
"Essentially, we’ve given Facebook a voice," said Marc Lefar, the CEO of Vonage Holdings Corp., which is based in Holmdel, N.J.
The calling works over cellular broadband, so-called 3G, and over Wi-Fi. It doesn’t use calling minutes, but will use up data, which could be a concern for subscribers to AT&T’s new limited data plans for smart phones.
In tests between a few phones in New York, call quality varied. On an iPhone 3GS, audio delays made the calls impracticable.
The app doesn’t carry any advertising. Lefar said Vonage may later charge for the ability to call landlines and send text messages. Versions for BlackBerry phones and for Windows and Mac computers are coming, he said.
There have been other applications that unite Facebook with Internet calling. For instance, another voice-over-Internet company, 8×8 Inc., provides a "call me" button that Facebook users can put on their profile page. When the button is clicked in a Web browser, calls are placed to the page’s owner and the clicker. If both pick up, 8×8 connects the calls to each other.
Phone companies have been slow to adopt the possibilities and savings offered by Internet calling technology, Lefar said.
Apple Inc. and AT&T Inc. used to block 3G calling apps from the iPhone, but relented in January after the Federal Communications Commission started looking into the matter.
Get the latest news alerts: at Twitter.