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AOL surfs past Street
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October 18, 2000: 7:20 p.m. ET
Subscriber growth, e-commerce revenue boost profit to 14 cents a share
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NEW YORK (CNNfn) - America Online, the world's biggest provider of online services, reported on Wednesday a first-quarter profit that beat Wall Street analysts' expectations, driven by strong subscriber growth and Internet commerce results.
AOL (AOL: Research, Estimates), which is awaiting U.S. regulatory approvals for its merger with Time Warner Inc., reported a profit, excluding special items, of $350 million, or 14 cents a share, compared with $182 million, or 7 cents a share, in the same period a year ago. Analysts surveyed by First Call had expected a profit of 13 cents a share.
 The Dulles, Va.-based company's first-quarter net income -- which includes one-time merger-related charges of $6 million -- came to $345 million, or 13 cents per diluted share.
Consolidated revenues climbed 34 percent to $1.97 billion from $1.48 billion in the previous year's first quarter, which was on par with analysts' projections. AOL said its revenue from advertising and electronic commerce climbed to a record $649 million, up 80 percent from the year-ago period.
AOL said it added 1.4 million net new subscribers for the quarter, boosting the AOL online service to more than 24.6 million members worldwide, as of Sept. 30. Analysts had expected subscriber growth of just over one million.
Analysts quiz company on advertising outlook
Analysts regarded the first-quarter results as neither exciting nor disappointing, with many apparently more concerned about the companys' outlook for coming quarters.
"The whole key is what kind of guidance they offer in the future," John Corcoran, an analyst at CIBC World Markets, told CNNfn's Street Sweep.
Wit Soundview analyst Jordan Rohan noted that the company reported a smaller revenue backlog of $1.083 billion, compared with $1.109 billion a year ago.
"We need more guidance from management as to whether the reduction in deferred revenues is a short-term seasonal variance or a long-term macroeconomic trend," he told CNNfn.com.
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On the conference call, the company sought to quell concerns about a slowdown in advertising growth, due in part to troubled Internet companies, which has hit media companies in recent weeks.
AOL Chairman and Chief Executive Steve Case noted that even if the advertising environment was entering a belt-tightening period, AOL, as a market leader, would benefit as advertisers bring their marketing dollars to big, proven, outlets.
"The current advertising environment benefits us because it incites a flight to quality," Case said. "AOL's advertising growth is right on target," he added.
Added AOL President Robert Pittman: "The industry is consolidating around big players, and we are benefiting from this trend. AOL's advertising commerce business is very healthy."
AOL stock has been hammered in recent session amid jitters that the Internet giant may not be immune to the decline in advertising spending that has hit the industry.
The earnings report was released after the close of the regular trading session. During regular trade, the stock closed at $46.91 a share, up $3.31.
In a statement, Steve Case said the merger with Time Warner, which has reportedly hit regulatory snags, would close as expected by the end of this year.
"We are on track to close the merger this fall, and we will hit the ground running," he said, echoing similar sentiment expressed earlier on Wednesday by Time Warner CEO Gerald Levin.
Time Warner (TWX: Research, Estimates) is the parent of CNNfn.com. 
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