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AOL Posts Loss Despite Revenue Gain

Online service spends heavily on subscriber growth.

By Sari Kalin, IDG News Service, Boston Bureau   

The number-one online service%squots revenues for the quarter that ended Sept. 30 were $349.9 million, company officials said. That is an increase of 77 percent over revenues during the same period one year ago, which were $197.9 million. Without the previously-announced $385.2 million charge, which led to a $3.80 per share loss, the company would have posted net income of $19 million, or $.17 per share. During the same period one year ago, net income was $6.1 million, or $0.06 per share, not including a one-time research and development charge.

Subscriber growth, along with more income from advertising and electronic commerce, led to the strong revenues, company officials said. AOL has retained more subscribers and has added 400,000 new subscribers in the first quarter, giving it a total of 6.9 million subscribers.

AOL%squots new business model is expected to reduce its reliance on subscriber fees for revenue. This, combined with its lack of historical data on the impact of new flat-rate pricing on its profit margins, has led AOL to write-off the $385.2 million subscriber marketing charge this quarter, officials said. AOL had initially planned to spread the charge over two years.