Is AOL Finally Crashing and Burning?

An anonymous reader writes "AOL's disastrous quarterly report showed cash from continuing operations was down 44% from a year ago (adjusted operating income was down 37%), as it continues a rocky transition from monthly subscription fees to advertising. (Their quarterly report also notes 'the cessation of large-scale access subscriber acquisition campaigns' — investor-speak for the fact that AOL will finally stop mass mailings of free trial accounts.) Unfortunately, AOL's advertising business 'did even worse. Its revenues declined by $110 million... every single segment is down.' AOL has already lost 86% of the 30 million subscribers it reported in 2001 — down to just 4.3 million — but advertising hasn't yet filled the gap (possibly because many AOL ads had been displayed to the users AOL no longer has). But at least, as one technology blogger notes, AOL has finally released a mobile application, 'in the new definition of "late to the party."'"

Comments

What does AOL even do?

[Anonymous Coward]

See title.

I really dunno what they do anymore. They still in the ISP business or what?

Re:What would you do?

[tomhath]

FTFA:

Tim Armstrong, Chairman and Chief Executive Officer. "Although we have much more significant goals for the future of AOL, we are pleased with this quarter's internal and external trends."

According to the report they went from a $90M net profit last year to a $1B net loss this year. I'm glad the CEO is pleased, but If I worked there I'd be looking for another job.

Dominant Businesses

[amiga3D]

These companies that reign on top for years like AOL always seem to be almost unable to change and adapt to new times and technology. They get locked in to their success to the point that they stagnate. When change happens they just get left behind.

Re:Dominant Businesses

[drinkypoo]

The problem was they were raking it in too thick to want to change until it was too late.

Acting like you are secure as #1 is the quickest way to end up in the #2 spot. It's either incompetence, or someone relevant had something to gain by not keeping AOL going.

Re:Dominant Businesses

[Pharmboy]

If you are making $200,000 with $1,000,000 bonuses, you have a vested interest in things NOT changing. Many businesses have higher up employees who get bonuses greater than their base salary, and those guys don't want to sacrifice short term profits for long term stability. "Why should I get my bonus cut in half due to reinvestment just to make the business stronger in 10 years, when I likely won't be here?". The bank industry is another example of how this screws up a business. Managers are more worried about their quarterly reports than the long term stability of the company.

This is the prime example of the disadvantage of publicly owned companies. While it is easier to get capital for expansion, privately held companies tend to have longer term thinking. Dominos pizza didn't go public until 2004, and did an excellent job of expanding before then. Chick-fil-A is privately held and the 2nd largest chicken restaurant chain the in US and wildly profitable due to a long term approach to business. There are other examples as well. AOL is the counterexample, where they focused on short term gains and had little (or poorly thought out) long term planning.

Re:Dominant Businesses

[Jay L]

I think the companies that *don't* reign on top are also unable to adapt. Most companies do one thing well (at most) - ever - and if that one thing happens to intersect over time with what the market wants, they're successful for as long as that intersection lasts.

You've Got Fail!

[jewishbaconzombies]

I'm surprised they lasted this long - particularly after Warner ditched them. It's a testament to the power of people unwilling to change their email addresses mostly I bet.

They're the 'A' in A.I.M.

[JSBiff]

You know, they're the people that run those "AIM" servers that you can access with Pidgin, Trillian, etc.

Re:AO who?

[Bigjeff5]

Indeed, you need about 20 people to run those websites, at most, and maybe $2 million a year, tops. I don't expect ad revenue to be more than about $3 million - $4 million a year, which is enough for a couple people to get rich.

They still have about 5,000 employees, though.

That's 4,980 too many to be supported by their website revenues, and is why they are losing billions with a 'b' dollars every year.

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[account_deleted]

Comment removed based on user account deletion

Re:What would you do?

[JDeane]

Screw it I'm going to web 11.0!!! I want 3D Live Streaming Video Chat, 3D video games, 3D Pictures and 3D Porn!!!

lol Someday soon half of the crap I just posted will be true...