No sign of ad upturn for AOL

By Matt Whipp

Posted on 4 Dec 2002 at 17:02

AOL says it expects any increases in subscription revenues to be offset by a drop in advertising revenues by as much as 50 per cent during 2003.

The drop is largely due to pre-booked ads not delivering the revenues first anticipated. This, balanced with the predicted income from new advertising will put revenues for 2003 roughly par with those of 2002, says the company.

AOL Time Warner chief financial officer Wayne Pace said he did not expect a turnaround for the company until as late as 2004: 'It is clear that 2003 will be a transition year, but with [the new business] plan we expect America Online once again to deliver solid growth beginning in 2004.'

AOL said it looks set to meet the lower end of its guidance for 2002, which indicated growth of between 5 and 9 per cent.

There was good news, however, as it was revealed that AOL's European units are outpacing loss-cutting schedules, with the division having already managed two thirds of its $300m goal. Additionally, AOL UK likely to reveal its first profit next year.

The future, according to AOL, looks cautious, with no new launches or investments in the pipeline. Jonathan Miller, CEO at AOL, said: 'Going forward we will be more conservative.'

Shares in the company dropped 14 per cent on the news, to $14.21.