A collection of CD's containing promotional software for AOL's internet service is shown Wednesday, July 19, 2006 in New York.MARK LENNIHAN/The Associated Press
AOL Inc. posted a drop in fourth-quarter earnings, but beat Wall Street forecasts as a rise in display advertising offset an ongoing decline at its Internet dial-up business, and its shares rose 6 per cent.
Chief Executive Officer Tim Armstrong said the Internet-based business was in a position to start increasing its revenue again in 2012.
"I would say it's a stretch, but we're going to stretch to get there," Mr. Armstrong said on a conference call with analysts. AOL has struggled with a business turnaround since its spinoff from Time Warner Inc in 2009.
Mr. Armstrong said the company's performance would depend on broader macroeconomic conditions.
AOL, which was an early Internet business leader, has spent the last years refocusing its business on Web advertising media, but finds itself in competition with major players like Google Inc, Facebook and Yahoo Inc.
Earnings from continuing operations fell to $22.8-million (U.S.), or 23 cents a share, from $66.2-million, or 60 cents a share, a year earlier.
Analysts on average expected AOL to post a profit of 16 cents a share, according to Thomson Reuters I/B/E/S.
Revenue dipped by 3 percent to $576.8-million.
Credit Suisse analyst John Blackledge described the quarter as "soft, but improving, with revenue slightly above our estimates."
AOL, whose media assets include Huffington Post and TechCrunch, said total advertising revenue rose by 10 per cent to $331.6-million.
Overall display advertising -- big splashy ads that appear on Web pages and command higher rates -- rose 15 per cent.
Subscription revenue from AOL's dial-up Internet access unit declined by 18 per cent.
Shares of AOL were up 6 per cent at $17.19 in trading before the market opened.