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AOL Shows Strong Earnings with Help from Google

AOL Shows Strong Earnings with Help from Google

Time Warner’s America Online turned in a better than expected performance in the first quarter of 2003 with a little help from paid search and broadband. According to reports from analysts, paid search brought in revenues of $27 million in Q1 from an AOL partnership with Google. Google powers the AOL search engine along with AOL search engine advertising – which is actually Google AdWords.

AOL reported total operating income of US$277 million, compared to $194 million in the year-ago period on revenue that remained essentially flat at $2.2 billion. Operating income before depreciation and amortization rose 21 percent, from $404 million in the first quarter of 2003 to $489 million in the most recent quarter.

On news of the earnings, Time Warner shares rose 4 percent, or 70 cents, to $17.21 in early trading on the New York Stock Exchange today.

The number of subscriber defections has slowed, especially with the new AOL Netscape low budget Internet service, and AOL says it has more than 3 million subscribers on its new broadband service. Total subscription revenue was up 1 percent, or $21 million, due to favorable foreign currency exchange rates at AOL Europe and the expansion of AOL broadband services, Time Warner said, with AOL Europe reporting a growth this quarter of 38,000 which brings its total EU subscribers to 6.4 million users.

Focusing on Search and More Public Users

AOL also introduced the AOL toolbar for both subscribers and nonmembers which opens AOL more so to the public than ever before, giving toolbar users an open door to the Google powered AOL search and members can view incoming email messages.

Along with providing a search box for AOL search, the toolbar lets users add icons to popular AOL content areas such as Yellow Pages, white pages, maps, weather, stock quotes, movie times and AOL CityGuide. Other features include the toolbar standard popup blocker and access to AOL Instant Messenger. While AOL provides a toolbar for Netscape, the latest toolbar is its first for the AOL-branded service, AOL officials said.

Google and AOL a Sound Partnership

After proven success in the US market with AOL serving Google and Google AdWords search results, AOL and Google will be working together in AOL’s global expansion. Last week Google announced their partnership with AOL Latin America to display its paid listings on AOL sites in Brazil, Mexico, Argentina and Puerto Rico. Google already provided Web search technology to AOL Latin America and is currently the search and search advertising provider to the US’s AOL.

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Loren Baker

Loren Baker is the Founder of SEJ, an Advisor at Alpha Brand Media and runs Foundation Digital, a digital marketing ... [Read full bio]

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