There isn't a lot to get excited about with AOL's (NYSE:AOL) first quarterly report since going public.

Revenue fell 17% to $809.7 million, with an 8% slide in ad revenue dragged down by a 28% plunge in access subscriber revenue. AOL did manage to reverse last year's deficit by posting a profit, but it bears noting that there was also a whopping $2.2 billion goodwill hit a year ago. The results aren't pretty when you back out the one-time charges. Free cash flow fell by a sobering 39%.

It's been a few years now since the Time Warner (NYSE:TWX) spinoff decided to all but turn its back on its access business, hoping to cash in through online advertising by reaching a wider audience after sending a wrecking ball to its walled garden.

It isn't working.

Access subscribers have now dipped below 5 million. It's a far cry from the 26.7 million paying customers who logged in to AOL in mid-2002. Churn is dropping, so AOL may be down to its core loyalists. The average subscriber has been around a whopping eight years.

This doesn't mean that its "Welcome" screens have bottomed out. AOL is unlikely to grow its rolls anytime soon, but that doesn't mean the company should just hand over its access subscribers to EarthLink (NASDAQ:ELNK) or United Online (NASDAQ:UNTD).

AOL concedes that its subscribers monetize at higher rates, and the 27% plunge in subscriber count is hurting.

In the real world, Google's (NASDAQ:GOOG) paid search mastery trumps Yahoo!'s (NASDAQ:YHOO) display advertising stronghold every quarter. At AOL, it's the other way around. Search and contextual revenue took a 19% hit, largely the result of the subscriber defections. Display advertising took a smaller 3% dip (with domestic display ads actually rising slightly).

Beyond the improvement in the company's churn rate, the trends don't bode well for AOL. This makes the company less attractive as a buyout candidate, since Microsoft (NASDAQ:MSFT), Google, or Yahoo! can afford to play this as a reverse auction by knowing that every quarter will mean more chipped fundamentals.

The wild card here is CEO Tim Armstrong. The former Google exec still has another year or two -- at least -- to see if he can work some magic before shareholders unleash the battering ram.

Ha! Who brings a battering ram to a wall-free garden?

What does AOL have to do to regain its 1990s magic? Share your thoughts in the comments box below.