AOL takes impairment charge hit

AOL posted a big loss in the second quarter after taking a $1.4bn goodwill impairment charge.

The weak numbers were reminiscent of the dark days of the early 2000s, before the internet company was spun off from Time Warner late last year.

The impairment charge was related to a gain in the deferred tax asset from the sale of the Bebo social networking site and a drop in its stock price.

“Nobody likes to show up to these calls and report down numbers,” said Tim Armstrong, chief executive.

The company’s financial report distinguished as one of the few in the sector showed declines in a growing market.

AOL reported a second-quarter net loss of $1.05bn, or $9.89 per share, from a net profit of $90.7m, or 86 cents per share, in the year earlier period.

Excluding the charge, AOL’s profit would have been 66 cents a share.

Revenue fell 26 per cent to $584.1m, after a 27 per cent decline in advertising revenue and subscription fees from its dial-up internet service.

AOL has said it expected a tough 2010 and did not expect a recovery until next year.

“There’s a lot of stuff that’s happening at the company that I would point to that are successful starting blocks for what AOL needs to do in the future,” Mr Armstrong said.

AOL sold Bebo to Criterion Capital Partners for about $10m in June, just two years after it had paid $850m for it.

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