AOL Inc. (NYSE:AOL), the Web publisher that owns the Huffington Post, reported higher-than-expected profit and revenue in the second quarter and announced the acquisition of video ad startup Adap.TV for $405 million. Shares jumped in premarket.
Net income for the three months ended June 30 fell to $28.5 million, or 35 cents a share, from $970.8 million, or $10.17 a share, a year earlier, the Ran Harnevo, New York-based company said in a statement on Wednesday.
The year-earlier figures were lifted by $970 million, or $10.16 a share, because of a patent transaction with Microsoft Corp. (NASDAQ:MSFT). Excluding that impact, operating income, net income and diluted EPS grew significantly, AOL said.
Quarterly revenue inched up 2 percent to $541.3 million, driven by global advertising revenue growth. Analysts on average predicted per-share earnings of 32 cents on revenue of $539.6 million.
AOL, which also owns TechCrunch, said it agreed to pay $322 million in cash and $83 million in common stock for Adap.tv, in a bid to boost its online-video segment, which 42-year-old Chief Executive Officer Tim Armstrong described as "the most important growth segment in our industry." AOL bought the Huffington Post in 2011 for $315 million.
The shares climbed 3.5 percent to $36.18 at 8:13 a.m. in New York on Wednesday after the statement was released. The stock rallied 22 percent this year through Tuesday, in line with the Nasdaq Composite index (INDEXNASDAQ:.IXIC).
The board authorized an additional $150 million stock repurchase plan. The company bought back 1.4 million shares of its own stock in the second quarter for $50 million.
AOL said global advertising revenue grew 7 percent to $361 million as global display revenue rose 5 percent to $146 million, third-party network revenue increased 9 percent to $121 million and global search revenue grew 8 percent to $94 million.
Revenue from subscriptions dropped 5 percent to $166 million, the company said.
The company's general and administrative expenses dropped $31.2 million in the second quarter as legal and consulting fees declined.