AOL’s Q4: When Failure = Success

And not in the positive “I now know 999 ways not to make a light bulb” way.

AOL’s Q4—their first earnings report since spinning off from Time Warner—numbers have all kinds of red ink and negative signs in front of them: display advertising revenue down 3% total YOY, international display down 22%, search and contextual down 19%, total ad revenue down 8%, subscription revenue down 28%, Other revenue down 5%. The only gain YOY was in US display advertising: a whopping 1%. And despite total revenues being down 17%, AOL still handily beat Wall Street expectations.

Yes, failure = success when people expect almost nothing of you. Says All Things D:

After factoring out one-time charges, AOL posted earnings of 71 cents per share on revenues of $801 million. Wall Street expected earnings of either 62 cents or 66 cents per share, depending on who you ask, on revenue of around $766 million.

And that earnings per share is way higher than, say, Yahoo (22¢).

Of course, the reason the expectations are so low is that none of this is a surprise. Time Warner ditched AOL for just this reason. (Boggles the mind to think that AOL originally bought TW. Crazy, isn’t it?) AOL has long been on the decline. Although CEO (and former Googler) Tim Armstrong is striving to retool sales in both personnel and strategy, their long slog might just mire them deeper in the red ink.

Meanwhile, the CEO of Time Warner got his expected raise.

What do you think? Can AOL survive?

AOL’s Mutiny on the Bounty?

So you are the new unencumbered AOL that has pushed its ship away from the Time Warner dock back in January. You are underway on a new journey that is supposed to reposition the company and put new life in the once iconic running man’s engine. In order for that to happen one would suspect that having the right people on the ship who plan to stick around would be the goal. Well, if that was the goal someone needs to make some new ones.

Yesterday it was announced that AOL’s CTO (chief technology officer) was getting off the boat. Considering that this journey isn’t even two months old yet this is not the kind of sign investors and others would like to see. All Things Digital tells us more

While AOL denied a report last week suggesting that CTO Ted Cahall is leaving, he actually is, um, leaving.

Oops!

Sources at AOL said the company thought Cahall was staying when it issued a statement saying he was not leaving. Cahall apparently had other plans.

Part of my job here at Marketing Pilgrim is to interpret news events. I do this from the point of view of the “everyman”. In other words, I am a regular guy like many who are readers here. So here I go with my opinion on this kind of a move at this point in time of the development of AOL as it moves into the future: OUCH! That’s gonna leave a mark.

Either something is seriously wrong there or, I don’t know…… you tell me. This is not a good thing to have happen and one has to suspect that we are not going to know just why this happened. The official word to employees from the main C-level guy at AOL, Tim Armstrong, reads like this.

Ted Cahall took on the role of CTO after I had asked him to move into that position from a broader business role at the company. Ted is the person who drove the complete replacement of our publishing systems and took AOL deeper into open-source technology, among many other accomplishments. We all owe him a debt of gratitude for the work he has done. Ted has decided to move back into the business side of technology and feels it’s the right time to move on from AOL. Ted has been a strong leader at AOL and agreed to transition the company to a new CTO. We are aggressively searching for a new CTO and we believe AOL is a very attractive opportunity for the right candidate.

Armstrong has been the CEO for less than a year and one of the guys he asked to move into this position has jumped ship. To make it even more odd is that AOL was denying this was even happening right before Cahall made his move.

You don’t need to be a rocket scientist to read between the lines here. So for all of you CTO types looking for your next gig, Tim says that AOL believes that it is a very attractive opportunity for the right candidate. I guess Cahall wasn’t the right one and one has to suspect that anyone who steps into that role in the future has a soft spot for Kool-Aid.

AOL vs Yahoo–Again

It’s been a long time doming, but now it’s officially, truly, official: AOL is part of Time Warner no more. (Technically, actually, AOL bought Time Warner—isn’t that weird?—and now they’re the ones being spun off.) And with its newly-single status, AOL is eyeing every woman in the room—especially old flame Yahoo.

They were flirting (or at least rumors have been flying) heavily last year, with reports resurfacing periodically. But now the love has turned to rivalry, with AOL and Yahoo both focusing on their Internet display advertising businesses.

AOL is also looking to take on other Internet behemoths like Citysearch, Yelp and Google in a local effort:

The initiative — which he characterized as “digitizing towns” — will grow to 100 municipalities in 2010, [AOL CEO and ex-Googler Tim] Armstrong said. Providing a turn-key platform where schools, government departments, local businesses, and classified listings firms can create or update Web sites will be at the heart of the effort.

AOL is also focusing on an API-intensive ad platform to allow users to interface directly with their data. That’s cool.

But the heart of their plan is their content. AOL will be heavily focusing its advertising sales upon its own properties, where 80% of the content is original. Yahoo, by contrast, has about 20% original content.

What do you think? Can AOL be turned around, or is it too late?

Aol.

I wanted to put the new rendering of the once iconic brand of America Online (AOL) as the headline just to see how it looks. It looks….weird. Below are some of the pictures from All Things Digital of how this new look will happen for the Aol. once it is officially cast overboard by the Time Warner mother ship. OK, so thrown overboard is bit harsh. How about pushed out the door with a resounding “Don’t let the door hit ya in the a#$ on the way out”?

My thoughts on the logo? I don’t get it. Why do you now go lower case with a period? I suppose it’s to help you see the new AOL (sorry Aol. or do I have to wait for the cord to be cut? I’m confused.) Fortunately, Aol. Ceo.Tim Armstrong will clear it up for us.

“Our new identity is uniquely dynamic. Our business is focused on creating world-class experiences for consumers and AOL is centered on creative and talented people–employees, partners, and advertisers. We have a clear strategy that we are passionate about and we plan on standing behind the AOL brand as we take the company into the next decade.”

Yup, I got that from the new logo. The only thing that matters about AOL / Aol. is whether it is a viable business that has a spot in the Internet space once the new arrangement is official. No tricky logo or any other quote from anyone will tell the tale like revenue and profits. But hey, there are things like press releases for those quotes so let’s hear it.

“Historically brand identity has been monolithic and controlling, little more than stamping a company name on a product. AOL is a 21st century media company, with an ambitious vision for the future and new focus on creativity and expression, this required the new brand identity to be open and generous, to invite conversation and collaboration, and to feel credible, but also aspirational. We’re delighted to have worked so closely with the AOL leadership team to create something bold and exciting that sets AOL apart,” said Karl Heiselman, CEO of Wolff Olins.

I never realized that using capital and lowercase letters could do so much.

AOL Asking 2,500 Employees to Fall on Their Sword

While I just read this over at All Things Digital I am still scratching my head (which means I am typing with just one hand, so if this reads slow you’ll know why). AOL tends to be in the news in the past year or so more about whether the business will survive and how will it look when it is pushed out of the Time Warner nest officially in December. Why today would be any different I don’t know but the news from AOL is how they are asking for 2,500, or one third of their work force, to volunteer for a layoff.

AOL, which has already told investors that it will spend up to $200 million firing a good chunk of its staff, has now told its employees. It is looking for “up to 2,500 volunteers,” CEO Tim Armstrong told his staff today. That’s a third of the company’s payroll.

The voluntary layoff program begins on December 4, a few days before the company spins off from Time Warner (TWX). If the company doesn’t get enough volunteers, it will axe people on its own.

Ok, so in this crappy job market you are asking someone to either volunteer to move on or just wait and see if they will be told to move on. What I didn’t see was what would make that kind of move better than rolling the dice and hoping that you don’t get axed? In other words, if there is any doubt in an AOL employee’s mind as to whether they would survive this what is the advantage of volunteering. Is there monetary incentive? I’m a little baffled. Of course, if you look at it from the business side this is the kind of news investors like to hear.

In a gesture of “I’m suffering too” Tim Armstrong is not taking his bonus in the neighborhood of $1.5 million due him this year. All of the cynics in the crowd can chime in on that one I am sure. I have no comment but here is Armstrong’s take.

“As a member of our team and the person who takes accountability for the results of the company, I am making the decision to forego my 2009 bonus. That decision is a personal one and is not a sign for the future payout of the overall bonus plan for employees.”

So what about AOL as an Internet business? What about what this will look like moving forward? With ICQ on the block and MapQuest as well what is AOL going to be offering the market place when it is asked to stand alone other than 2,500 more folks with AOL on their resume when looking for work?

It might be interesting to hear from the MP crowd as to what their view of AOL is in the Internet marketing space as we approach this new phase in the company’s history. Let’s hear it.

Nielsen to Measure Online TV Audience

Nielsen has been measuring television audiences for decades. Now online TV is starting to take over—but do we have accurate measurement of the online TV audience?

comScore and other online measurement companies are watching videos—I mean, online video audiences—grow and grow. Now Nielsen will use a new “Internet Meter” with its People Meter families to measure online as well as offline TV consumption.

The Internet Meter will measure the “extended screen”—online television from cable companies, such as OnDemand Online from Comcast and TV Everywhere from Time Warner. This type of viewing may have slipped past online measurement companies looking at web-based TV, like from Hulu. Nielsen has worked in online measurement as well, though they don’t say if they’ll be combining Hulu numbers with the online cable numbers.

According to Read Write Web, Hulu has tended to prefer comScore’s measures of its audience, since comScore’s numbers have shown a higher viewership than Nielsen’s. Online measurement is notoriously tricky in this area, since there aren’t set industry standards on how to count audiences, and as always, there can be sampling biases.

RWW says that the Internet Meter might combat inherent problems in sampling—but the Internet Meter will be based on the same statistical principles, which are fairly sound. (Yeah, I know, it doesn’t seem like a small number of people can accurately predict the habits of the general population, and a larger sample usually yields more accurate data, but if people are truly chosen at random, a small sample has a 90-95% chance of accurately reflecting the population, depending on how they do their calculations. </AP stats lesson>)

What do you think? Will this make a difference to online television? Will it affect ad prices online?

Google on Short End of Current AOL Valuation

Just four years ago Google made a big splash in the Internet space by buying a 5% stake in AOL for $1 billion. Do the math and that placed the valuation of the company at around $20 billion. The fall of AOL from an Internet powerhouse to a “will they ever be influential again?” story is one that Google now knows all to well. Bloomberg reports today that on July 8th Time Warner bought that 5% share back from Google for $273 million. The valuation of AOL is now placed at $5.66 billion. What a difference a few years makes, huh?

Google wrote off $726 million of that investment last year so the pain of the misstep is mostly in the past. It doesn’t mean that it doesn’t sting, however.

So how are things looking for AOL these days? With new CEO Tim Armstrong at the helm there seems to be some buzz about the potential but outside of the AOL PR storm it remains to be seen if there are any believers. An AOL spokesman went into no comment mode when asked about the valuation.

AOL has its work cut out for them and it appears that the worst is still not behind them.

Armstrong told employees last week that job cuts are possible as he undertakes a 60-day review of the Internet company’s cost structure.

Now that Armstrong has set the table, it’s highly unlikely that the ax won’t fall at AOL in the next 60 days. What’s it like at the company these days? Let us know if you are there to sweat out the ‘possible job cuts’. As for the rest of us what is the expectation of AOL moving forward? Will they ever have the position in the marketplace they once held? Will they ever really matter again?

Time Warner Approves AOL Spin Off

Not so much a revelation, but more of tying-up a loose end. As expected, Time Warner’s board of directors have approved the spin-off of AOL–sans the dial-up division.

Time Warner hopes to conclude the spinoff, which requires an SEC review, by the end of the year. The company also expects to buy back Google’s 5 percent stake as part of completing this transaction but there is no confirmation that Google has agree to the terms or whether a agreed-upon valuation has taken place.

I’m sure AOL CEO Tim Armstrong is licking his chops at the news. Now we’ll get to see what he’s made of.

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