November 2, 2011 5:38 pm

AOL chief plays down Yahoo takeover

Tim Armstrong, chief executive of AOL, sought to quell speculation that his company might be bought by Yahoo, again playing down prospects of a long-rumoured tie-up between two troubled internet icons.

“Yahoo has their own business to worry about. I’m solely worried about AOL at this point,” Mr Armstrong said in a video interview with AllThingsD, a technology news website, posted after the company reported third-quarter earnings. “When I think about our company and where our future is, and those things, it’s really as an independent entity, and being very focused on our core strategy.”

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Asked if that meant Mr Armstrong wanted AOL to remain a standalone company, he replied: “From our results today, and from what you’ve heard me say publicly, and what we’re focused on, the answer is yes.”

Yahoo is in turmoil as it explores the sale of its Japanese business and remains at the centre of takeover speculation.

Mr Armstrong’s comments came as AOL reported mixed quarterly results that illustrated the company’s multifaceted challenges. Overall revenues were down 6 per cent to $532m from a year earlier, though advertising sales were up.

The company’s internet access business, which is in decline, saw revenues fall 22 per cent to $192m, as fewer people took the dial-up service. This led to fewer people visiting AOL.com, which affected overall page views and advertising impressions.

Traffic across AOL’s properties, which include the recently acquired Huffington Post and TechCrunch blogs, was relatively flat, as traffic gains from the acquired sites offset losses from AOL.com and Mapquest.

Ken Sena, an analyst at Evercore Partners, said he believed AOL’s content acquisitions, which totalled about $400m in a year, were good strategic moves as they have bolstered traffic that would have otherwise declined. “It was the right thing to do,” he said. “I do believe those assets are growing, but it becomes a question of what is the magnitude of the offset.”

Advertising revenues were up 8 per cent in the quarter, with display advertising revenues up 15 per cent, figures Mr Armstrong said showed his turnround strategy was beginning to work.

But Mr Sena said those results reflected higher rates, not wider distribution. “Each quarter when they’re showing this display revenue growth it’s coming from pricing not volume, and you wonder how long advertisers will let them get away with that,” he said.

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