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AOL beats Street
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October 20, 1999: 6:46 p.m. ET
Reports 15 cent-per-share profit, sets marketing accord with Gateway
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NEW YORK (CNNfn) - America Online Inc. reported better-than-expected first quarter earnings Wednesday of $184 million, or 15 cents per share, reflecting soaring revenue.
The results, representing profits on a fully taxed basis, compared to a First Call estimate of 13 cents a share and a year-ago profit of 4 cents.
AOL (AOL) also disclosed a new partnership with PC maker Gateway, in which the companies will co-brand and distribute each other's products across their respective sales channels.
The Dulles, Va.-based company reported that total revenue surged 47 percent to $1.5 billion, as quarterly subscription revenues grew to $995 million from $723 million in the year-ago quarter.
AOL CEO Steve Case attributed the company's rise in revenues to its multiple brand strategy, referring to AOL offerings such as Internet services via both AOL and CompuServe 2000, ICQ instant messaging and Netscape.
In a press conference, Case also announced AOL's strategic alliance with PC maker Gateway (GTW). The companies will distribute each other's products and services and share profits.
AOL will be featured on Gateway's PCs and AOL will also act as Gateway's Internet service provider (ISP) to support Gateway.net. The co-branded service is slated to launch within the next few months. Financial terms of the partnership were not disclosed.
"This is significant progress for us in the ISP market and allows us to leverage our expertise and infrastructure," said Case. "It also furthers AOL's multiple branding with our entrance in the OEM space."
Other business sectors including advertising and commerce doubled in revenues, growing to $350 million. In addition, AOL's Internet provider service gained 1.1 million new members, totaling over 18 million worldwide.
Traders Wednesday anticipated strong numbers from AOL, lifting its shares 5-3/4 to 121 before the company's announcement after the closing bell.
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AOL
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