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AOL Share Price Plummets After 2nd Quarter Results And Board Announces Buy Back

AOL Stock Price Plummets

AOL’s advertising revenues may have grown for the first time in a while (up 5% to $319 million), but total revenues were still down 8% $542.2 million when compared with the same period last year, and the markets are not impressed – with the AOL share price falling nearly a third to $10.2. In response, their board has announced the greenlighting of a share buy-back scheme of $250 million of its outstanding shares of common stock from time to time over the next 12 months to try to stabilise the situation.

I will ignore for this article the problems of quarterly results reporting in that it prevents companies looking longer term, but the constant fluctuation in designs for the company continues to cause AOL issues. Most recently with the purchase of the Huffington Post, AOL has attempted to shift into the content farming business, content onto which it can sell ads (the previous focus of AOL with Platform-A). They have managed to reduce costs by sacking a number of their paid bloggers and instead trying to staff their various web properties with unpaid bloggers – a strategy that may work for a large-scale general pop-political site like HuffPo, but it is yet to prove successful for more targeted offerings.

That their advertising revenues increased should not surprise anyone as they have bought one of the most highly trafficked websites on the internet in HuffPo, but the real question is whether that revenue will continue to increase – or whether the readership of its other web properties falls in response to the quality of journalism falling with the sacking of many of their paid writing staff.

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