AOL’s Long Term vs. Short Term

Posted by Admin - December 22nd, 2011

AOL reported a shrinking subscriber’s list and declining sales Tuesday which led to substantial decreases in stock prices on Wednesday. The shares had fallen 12% just at midday, to $24.58.

The selloff came after AOL said sales fell in the first quarter and signaled in a conference call with analysts that growth will be sluggish for the remainder of 2010.

“It was a very disappointing quarter,” said Ben Schachter, an analyst at Broadpoint AmTech. “The message is that the turnaround is going to take longer than expected.”

AOL said total sales fell 23% in the first quarter to $664.3 million. Subscription revenue plunged 28%, while advertising sales fell 11%.

AOL is a company that needs to revolutionize its business model or risk losing its market-share entirely. Later on in the article the CEO suggests they’re pursuing long-term strategies, in an effort to strengthen their position for the future.