America Online turned in solid second-quarter numbers, posting net income of $20.8m on revenue that rose 44.6% to $592m. Earnings per share came in at $0.17, one penny better than the First Call consensus. Those results compare with a whopping net loss of $129.1m a year ago. The positive news comes only a day after Wall Street got what it desired from AOL, as it boosted its subscriber fees, reorganized itself and cut 500 workers at the newly-acquired CompuServe unit (CI No 3,344). That news fueled an $11.875, or 12.0% rise in AOL’s stock, which closed at $110.325. Only a year ago, the shares were trading in the mid-30’s. The recent boom in share price has led the Dulles, Virginia online service to announce a two-for-one stock split payable on March 16. The split will leave roughly 220 million shares outstanding. During the quarter, AOL added 1.267 million new members to take its total to 10.7 million by the end of the quarter. It now claims more than 11 million. Service revenues rose 37.6% and totaled $483.2m, while advertising and commerce revenue soared 86.9% to $108.8m. As a result of chief executive Steve Case’s game plan of leveraging the subscriber base for all its worth, the company’s backlog of advertising and commerce contracts rose $96m to $320m in the quarter. AOL says average daily usage by its members grew to 41 minutes per day from 21 in the year ago quarter – when flat-rate pricing was being launched – and that was cited as a main reason for the announced rate hike, effective April 1. Also adding to the healthy bottom line for the quarter was a 36.2% drop in marketing costs to $96.8m. Six-month net income was $39.9m, or $0.33 per share, on revenue up 46.6% at $1.11bn, compared to a loss of $482.8m last year.
