Blog Post

10-K Watch: AOL Expects Further Declines In Q1

AOL (NYSE: AOL) warned investors that it expects ad revenues on both its own properties and third party networks to “decline significantly” as due to continued fall in search and contextual advertising, the company said in its 10-K filing. No surprise there, as AOL’s dial-up business continues to erode, and the company has worked to restructure its European business, The hope has been that its string of acquisitions — most recently and notably the $315 million it paid for The Huffington Post — will help turn things around at some point this year.

Among the other highlights of the report:

— AOL paid $6.2 million in compensation expense related to incentive promises for its seven 2010 acquisitions. This year, incentive costs are expected to come in at $35.7 million, with $15.5 million next year and and $3 million in 2013. Separately, AOL says that cash payments related to expenses for 2011, 2012 and 2013 will amount to $11.5 million, $27.6 million and $20.3 million, respectively.

— “Cash restructuring charges” related to the HuffPo acquisition will hit approximately $30 million, of which $10 million “represents cash consideration that will be reflected as a restructuring charge immediately following the acquisition.”

— In 2010, AOL got 53 percent of its revenues from advertising, compared to 54 percent the year before and 50 percent in 2008. Last year, subscription dollars made up 42 percent of AOL’s total revenues, while 5 percent came from “other,” which includes fees related to mobile e-mail and instant messaging and licensing of Mapquest.

— By the end of 2010, AOL had 5,860 people working for it, including approximately 1,200 related to Patch.