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AOL Shares Rally on Q3 Results (AOL)

Shares of global web services company AOL Inc. (NYSE: AOL) rallied in trading today as investors cheered the company’s third-quarter financial results. The New York City-based company reported higher-than-expected revenue and profit for the third quarter, driven by strong advertising growth.

AOL’s advertising growth was the strongest in seven years, resulting in the company posting better-than-expected revenue for the third quarter. The company’s revenue for the quarter was $531.7 million, compared to consensus forecast of $521.6 million.

Advertising revenue for the quarter climbed 7% to $340 million in the third quarter. The company’s subscription revenue for its dial-up services, meanwhile, dropped 10% to $173.5 million.

AOL’s adjusted OIBDA grew 12% on a year-over-year basis. The company also reduced its adjusted OIBDA expenses excluding Traffic Acquisition Cost (TAC) and one-time items sequentially for the fifth straight quarter.

Net income for the quarter was $20.8 million, compared to a net loss of $2.6 million reported for the same period in the previous year. Diluted earnings per share for the quarter were $0.22, compared to a loss per share of $0.02.

Tim Armstrong, Chairman and CEO of AOL, said that the company just reported the best relative revenue performance in seven years and the second consecutive quarter of year-over-year profit growth, exceeding its expectations. Armstrong further said that AOL is positioned for growth in 2013 and beyond with consumer and advertiser demand growing for its premium content and innovative products, video, services and ad formats.

AOL shares rose sharply as investors digested the company’s strong third-quarter financial results. At last check, the stock was trading 21.73% higher at $43.59 on above average volume of 7.42 million. The stock hit a 52-week high of $43.71 in trading today.

Year-to-date, AOL shares have gained more than 189%, easily outperforming the S&P 500.


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