AOL Inc. rose the most in almost three months Wednesday after quarterly profit exceeded analysts’ estimates as display advertising sales gained for the fourth straight period.
The shares advanced 9.6 percent to $17.76 at the close in New York, the biggest one-day climb since Nov. 2. They have fallen 26 percent in the past 12 months.
Fourth-quarter profit excluding some items was 42 cents a share, compared with the 32-cent average of 11 analyst estimates compiled by Bloomberg. Display advertising revenue rose 15 percent from a year earlier, the New York-based company said in a statement.
“For AOL to transition to the future, they need to show they can grow the display business,” Ken Sena, an analyst at Evercore Partners Inc. in New York, said in an interview before the earnings announcement. He rates AOL “equal weight” and doesn’t own any of its shares.
Chief Executive Officer Tim Armstrong has bolstered ad revenue with initiatives such as acquisitions of the Huffington Post and TechCrunch websites to try to reverse sales declines after the December 2009 separation from Time Warner Inc.
“You’re seeing the long-term benefit of the operational changes of the company,” Armstrong said in a telephone interview, citing the fact that AOL has half as many employees as it did two years ago.
Net income for the quarter declined to $22.8 million, or 23 cents a share, from $66.2 million, or 61 cents, a year earlier, AOL said.
Sales fell 3 percent to $576.8 million, beating the $566.8 million average estimate. Advertising sales gained 10 percent, while revenue from Internet-access service slumped 18 percent.
Last month, Google Inc. and Yahoo! Inc. both reported fourth-quarter revenue that fell short of analysts’ estimates. Google’s results were hurt as weaker European demand and a shift to mobile advertising crimped growth, while Yahoo saw a 4 percent decline in display advertising.
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