AOL Shares Plunged: What You Need to Know

Watch stocks you care about

The single, easiest way to keep track of all the stocks that matter...

Your own personalized stock watchlist!

It's a 100% FREE Motley Fool service...

Click Here Now

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: AOL (NYSE: AOL  ) dropped 31% in intraday trading today after missing earnings expectations and issuing disappointing guidance.

So what: Non-GAAP EPS of -$0.11 fell well short of the $0.04 consensus estimate, and deteriorated from $0.66 in the year-earlier quarter. Revenue fell 8% year over year, as display ad revenue growth of 14% and total ad revenue growth of 5% of were more than offset by a 23% decline in subscription revenue and 20% decline in other revenue.

Now what: Profits declined because of both the revenue decline and rising costs of revenue. The higher costs owed to increases in investment in "areas of strategic focus including acquisitions," incentive compensation expense, and traffic acquisition costs related to third-party ad revenue. On the earnings conference call, the company's CFO guided 2011 adjusted EBITDA to $340 million to $370 million, well below the $417 million consensus forecast and a decline of 50% to 55% year over year. One analyst summed it up nicely: "The turnaround still remains questionable."

Interested in more info on AOL? Add it to your watchlist by clicking here.

Fool contributor Cindy Johnson does not own shares of any company named above. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Read/Post Comments (0) | Recommend This Article (2)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1536522, ~/Articles/ArticleHandler.aspx, 10/23/2016 8:29:08 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
AOL.DL $0.00 Down +0.00 +0.00%
AOL CAPS Rating: *