Beleaguered America Online (AOL) suffered a fourth quarter loss of $11.8 million after accounting charges, but analysts said the period's strong revenue growth represented a turning point.
The online services company, which made profits of $16.1 million in last year's Q4, saw sales leap by 42 per cent to $475 million, while additional revenue from advertising and commerce trebled to $90.1 million. This growth represents "proof to the market that AOL can survive in the Internet world and has a future, which not everyone believed last year", according to an analyst at Smith Barney.
But, in addition to the Q4 loss, AOL had to restate its third quarter figures, resulting in a loss of $4.7 million. It had originally recorded a profit of $2.6 million. The losses in both quarters were the result of accounting charges imposed by federal regulators. Without these, AOL would have made a profit of $10.9 million in Q4.
For instance, the Securities and Exchange Commission asked AOL to take a $24.5 million charge related to renegotiated contracts in the fourth quarter rather than next year, because the reworking of the deals largely took place in that quarter.
AOL has come in for criticism from Wall Street before for booking revenue in advance or deferring large one-off expenses. Last year it tools a $385 million charge - about equal to all the profits it had ever made - to account for marketing costs as it incurred them. Since then, it has two quarters in profit, now in effect negated by the latest charges, and chairman Steve Case said he could not guarantee there would be no further restatements.
On the business front, though, AOL was feeling more optimistic than it has for a year. The revenue improvements came partly from new sources of income such as advertising and online transaction fees, which compensate in part for AOL's introduction of flat fee, rather than per hour, charging. Analysts also pointed to increased original content and better service quality - AOL has spent $350 million so far this year on speeding up acces with a massive modem expansion, which it says enables it to support 11 million users.
The company said it added 600,000 new subscribers in the fourth quarter, bringing its total base to 8.6 million worldwide.
For the year, AOL made a loss of $499.3 million on revenue of $1.69 billion.
Cotton seedling freezes to death as Chang'e-4 shuts down for the Moon's 14-day lunar night
Fortnite easily out-earns PUBG, Assassin's Creed Odyssey and Red Dead Redemption 2 in 2018
Meteor showers as a service will be visible for about 100 kilometres in all directions
Saturn's rings only formed in the past 100 million years, suggests analysis of Cassini space probe data
New findings contradict conventional belief that Saturn's rings were formed along with the planet about 4.5 billion years ago