AOL's Q4 Revenue Plummets, Drags Down Time Warner

AOL's revenue fell 23 percent in the fourth quarter, including a steep decline in ad sales, as the Time Warner online unit continues to post disappointing results.

Revenue dropped to US$968 million in the quarter ended Dec. 31, 2008, from $1.25 billion in 2007's fourth quarter, Time Warner said Wednesday.

Revenue from Internet access subscriptions -- a business AOL has been phasing out for years -- fell 27 percent. More concerning is the 18 percent drop in ad revenue, AOL's primary business.

After a $2.2 billion asset writedown, AOL had an operating loss of $1.9 billion, compared to operating income of $274 million in 2007's fourth quarter.

For the full year, AOL's revenue fell 20 percent to $4.2 billion compared with 2007. Subscription revenue dropped 31 percent and ad revenue shrunk 6 percent. AOL also posted an operating loss of $1.1 billion, compared with operating income of $2 billion in 2007.

Last week, AOL announced plans to lay off 700 employees -- 10 percent of its staff -- this year.

As a whole, Time Warner saw its fourth quarter revenue decline 3 percent to $12.3 billion, dragged down mostly by its AOL, films and publishing units.

Time Warner posted a net loss of $16 billion, or $4.47 per share, compared with net income of $1 billion, or $0.28 per share, in 2007's fourth quarter. The net loss includes a previously-announced $24.2 billion write-down of the company's AOL, cable and publishing assets.

For the full year, Time Warner grew its revenue 1 percent to $47 billion, but posted a net loss of $13.4 billion, or $3.74 per share, compared with net income of $4.4 billion, or $1.17 per share.