America Online has reported hefty increases in both its operating income and revenues for the third quarter of its fiscal year ended March 31, a result of increases in advertising and e-commerce sales along with strong growth in new members.
The Dulles, Virginia-based online service reported net operating income of $US117 million or 11 cents per diluted share, excluding one-time events such as the merger with Netscape Communications, AOL said in a statement released late yesterday. In the like quarter one year earlier, AOL reported just $39 million in earnings, or 4 cents per share, AOL said. Including Netscape income and one-time events, AOL reported net income of $420 million or 33 cents per diluted share.
Revenues shot up 66% over the combined AOL and Netscape revenues from the same quarter last year, reaching $1.3 billion. In particular, revenues from advertising, commerce and other revenues soared 94% over the previous year's third quarter, to $275 million.
Significant one-time events during the quarter included AOL's recognised pretax gain of $567 million for the sale of Excite, Inc. and pretax charges of $103 million resulting from the Netscape merger and reorganisation, AOL said.
AOL attributed the revenue growth largely to its advertising and e-commerce businesses, where revenues rose to $157 million. Excluding Netscape revenues, that is an increase of 101 percent from the third quarter of last year, AOL said.
Membership in all of its business lines continued to grow. Contributing to the quarterly results was the addition of 1.8 million new subscribers worldwide, AOL said. Subscription revenues increased to $869 million, a 50 percent increase over the like quarter last year.
AOL's online service now has 16.9 million members worldwide. With AOL CompuServe's 2 million members, the membership figure rises to 19 million, said AOL. AOL also has more than 32 million registered users of its online chat service, ICQ, and another 15 million registered users of the Netscape Netcenter portal.
The amount of time the average AOL member spent online also edged up from 46 minutes last year for the like period to 55 minutes this quarter, AOL said. Although AOL's memberships are mainly unlimited time for a flat monthly fee, the amount of time spent online by users can affect advertising and e-commerce revenues.
AOL and CompuServe membership outside of the U.S. reached 3.2 million in the quarter, including AOL Bertelsmann Europe's (AOL Europe) 2.8 million members. AOL Europe is the 50-50 online joint venture between AOL Inc. and Bertelsmann AG, Europe's leading pan-European Internet provider, according to AOL. AOL Europe operates separate AOL and CompuServe services in the U.K., France and Germany, as well as CompuServe in Switzerland, Austria and the Netherlands.
Yesterday, AOL Europe said it had created a new corporate development division to be headed by Christopher Hill, currently director of AOL International. Hill's role will be to help AOL Europe establish itself in new markets in Europe, the company said in a statement, and to expand its strategic partnerships and alliances in the area of networks, technology and electronic commerce.
AOL Europe also plans to strike a number of partnerships that will allow it to deliver its online content via a variety of devices, including TV, mobile phones, personal assistants and rocket books, the company announced at the CeBIT trade fair in March.
In Asia-Pacific, AOL and China Internet Corp. will launch AOL-branded service in Hong Kong this summer and will follow up with its first service in Latin America, working with the Cisneros Group.
In the third quarter, AOL and Sun Microsystemsalso launched the Sun-Netscape Alliance and began to detail their combined e-commerce strategy, AOL said. The Alliance will deliver e-commerce products for large corporations that allow them to put their businesses online quickly and scale up rapidly, AOL said.
AOL, in Dulles, Virginia, can be reached at +1-703-448-8700 or at http://www.aol.com/.
(Mary Lisbeth D'Amico in Munich contributed to this report.)