Net earnings at America Online rose 10% to $540 million in the first quarter ended March 31, up from 2004’s first quarter, Time Warner Inc., AOL’s parent company, reported today. AOL benefited from a reduction in network expenses ($168 million) and lower marketing expenses, the company said.
However, AOL posted a 3%, or $58 million, decline in revenues to $2.1 billion in the first quarter. That reflected a 45%, or $97 million, increase in advertising revenues, which was more than offset by an 8%, or $145 million, decrease in domestic subscriptions.
Advertising revenues benefited from growth in paid search of $27 million and traditional advertising as well as the $60 million acquisition of Advertising.com, which closed in August.
As of March 31, AOL had 21.7 million U.S. members, a decline of 549,000 from the prior quarter and down 2.3 million from the year-earlier quarter. In Europe, AOL had 6.3 million members, an increase of 18,000 from the previous quarter and a decline of 69,000 from last year’s quarter. Time Warner says it expects U.S. membership to continue to decline as consumers migrate to high-speed broadband and lower cost dial-up services.
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