AOL Announces Record Earnings and Stock Split

America Online (NYSE: AOL) continues to wow shareholders and analysts with record quarterly results and yet another stock split, announced late Wednesday. Net income, total revenues and membership were all on the upswing, setting new records also for advertising and e-commerce growth.

Net income for the second quarter, which ended December 31, totaled $88 million (US$) — a 340% increase over last year’s Q2. Total revenues increased by 62% over the same quarter last year to $960 million. Advertising, commerce and other revenues reached record levels of $181 million, up 66% over last year’s second quarter.

It’s a Game of Numbers…and AOL Has Them

AOL membership grew at a record pace in the quarter. 1.6 million new members joined the service, bringing the total worldwide membership to 15.1 million, as of December 31. With the addition of CompuServe’s 2 million members, the company has a total of more than 17 million paying members worldwide, as well as millions of users of its various Web brands.

E-Commerce Fuels Growth

AOL’s chairman and CEO Steve Case singled out e-commerce as a driving force behind the growth. “Electronic commerce is changing forever the way businesses sell and consumers buy goods and services.”

President and COO Bob Pittman also commented on the expected impact that AOL’s acquisition of Netscape will have on the e-commerce market: “When we close the transaction [in early Spring], we’ll be ready to move quickly to build on the initial success of Netcenter, and market turnkey e-commerce solutions to businesses seeking to join or increase their participation in the Net Economy.”

Positive Progress

A quick comparison of the second quarter results for last year and this year, shows substantial improvements in several areas:

Revenues from online service climbed to $779 million, an increase of 61%.

Advertising and e-eommerce revenues grew 133%, from $54 million to $126 million.

The backlog of revenues from advertising and e-commerce increased from $598 million to $729 million.

Operating margins improved from 5.4% to 13.6%.

Marketing expenses also improved, decreasing from 16% to 14% of revenues.

AOL members increased their average daily usage on the AOL service from 41 to 48 minutes. 2-for-1 Stock Split

Adding to this week’s good news for shareholders, AOL’s Board of Directors approved another stock split — this being the second split in the past three months.

On February 22, 1999, stockholders will receive one additional share for every share they own on the record date of February 8, 1999. Following the effective date of the split, AOL will have approximately 933 million shares outstanding.

America Online went public on March 19, 1992. This upcoming stock split marks the sixth since November 23, 1994.

A stockholder who bought 1,000 shares for $11,500 at the company’s initial public offering on March 19, 1992, and held the stock would, after the latest split, own 64,000 shares valued at approximately $5 million based on current prices.

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