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AOL, Inc. (AOL) Earnings Beat Estimates, Buys Video start-up Adap.tv

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AOL, Inc. (NYSE:AOL) reported quarterly earnings Wednesday, which are better than the analyst’s estimates, and it also announced the acquisition of automated video ad server Adap. TV. The company is working hard to stand in competition to Google Inc (NASDAQ:GOOG) and Yahoo! Inc. (NASDAQ:YHOO) in online ad business.

AOL, Inc. (AOL) Earnings Beat Estimates, Buys Video start-up Adap.tv

Quarterly earnings for AOL came in at 35 cents per share, which was more than analysts’ estimates by 2 cents. Overall, revenue surged by 2 percent from the last year.

Earnings similar to last quarter

AOL, Inc. (NYSE:AOL) earnings growth was more or less similar to its last quarter earnings where the company posted a strong result for its ad network unit and publishing properties. However, it suffered a loss in its core business of dial up subscription.

AOL’s publishing business is well on track to become profitable but the so called “brand group” reported a loss of $1.4 billion as against $15.2 billion loss from the corresponding quarter of the previous year. Most of the loss came from AOL’s much hyped but failed attempt Patch, which was to create a national network of local news sites.

Acquisition complements AOL’s goal

AOL, Inc. (NYSE:AOL) acquired Adap.TV for $405 million and has added another weapon to complete its ad tech a set of tools through which publishers will buy and sell online ads in real time. Through tech Stack, the company plans to rack in revenue from third parties and publishing properties like AOL.com and the Huffington Post will also get assistance.

Adap.TV can prove to be a significant driver for AOL if the growth in market for online videos keeps on growing. This segment can give AOL a much needed break when online advertising business is declining due to dropping display ad prices.

CEO Armstrong is eyeing to bring together and simplify the ad tech industry that has various small companies giving services of ad technology, and this acquisition fits best into his goal. Armstrong stated in July that he will earn TV ad dollars through a “Programmatic upfront” under which brands will give major amount of money to buy ads online.

The latest earnings and acquisition reports is a remarkable indicator of  growth for AOL compared to early 2012 when the company’s ad and publishing businesses was struggling and AOL, Inc. (NYSE:AOL) was selling off assets such as patent portfolio and cash.

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