AOL, Inc. (AOL) Stock Nose Dives On Earnings Miss

The stock price of AOL, Inc. (NYSE:AOL) suffered a steep decline today after the company reported first quarter earnings that missed consensus estimates of Wall Street analysts. The shares of the company were down more than 22% to $34.19 per share as of 11:44 AM in New York.

Financial results

AOL, Inc. (NYSE:AOL) said its net income declined 64% from $25.9 million to $9.3 million. Its earnings per share dropped 66% to $0.11 per share from $0.32 per share in the year ago quarter.

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The company’ adjusted earnings per share of $0.34 fell short of the $0.45 earnings per share expected by analysts polled by FactSet.

According to the company, its earnings for the quarter were negatively affected by a pre-tax restructuring charge of $12 million and an asset impairment charge of $10 million from the write-off of capitalized software development costs. AOL, Inc. (NYSE:AOL) explained those charges reduced its earnings by $0.23 per share.

AOL, Inc. (NYSE:AOL) posted $583.3 million in revenue, an increase of 8% from $538.3 million in the same period a year ago. According to the company, its global advertising revenue rose 16% to $433.4 million, but its subscription revenue declined 10% to $149.9 million.

The company ended the quarter with $124 million cash and equivalents as well as $30 million outstanding debt under its $250 million senior secured revolving credit facility agreement.

Acquisition

AOL, Inc. (NYSE:AOL) recently acquired Convertro, a multi-touch attribution modeling technology provider for brands and agencies. The company paid approximately $101 million in cash and stock for the acquisition.

The acquisition price included $89 million cash, $2 million in converted securities, and a $10 million earn-out, payable over a period of 17 months subject to the accomplishment of certain product development milestones.

According to AOL, Inc. (NYSE:AOL), combining its platforms with Convertro’s platform allows marketers to identify and accurately value every consumer touch point through the purchase of funnel from the first exposure to conversion.

In a statement, AOL Chairman and CEO Tim Armstrong, chairman said, “AOL’s investment in global media and technology platforms is allowing AOL to compete on a global scale.”

AOL stock at risk

Over the past 52-weeks, the shares of AOL, Inc. (NYSE:AOL) traded as high as $53.22 per share and as low as $32.19 per share. According to SmartStops, the stock is currently at an elevated risk given its huge decline today due to disappointing earnings results.