Not even Huffington Post or TechCrunch could save AOL, which value plummeted over 25% today

Tim Armstrong, CEO, AOLAOL stock hit its lowest point since the company separated from Time Warner, after a 25.75 percent death-tumble. A last-minute rally pulled shares up, which earlier had fallen by more than 26 percent. AOL closed at $11.19, down from its $15.19 opening.

The disastrous day of trading followed another. Yesterday, on the first day following Standard & Poor's downgrade of the United States credit rating to AA+ from AAA, the Dow closed down a stunning 635 points and Nasdaq declined by 6.9 percent -- taking many tech stocks with it.

Today, while other tech stocks rallied, AOL delivered dismal second-quarter earnings results on a day when shareholders were unforgiving following yesterday's tortuous day of trading. AOL missed expectations but cut its losses by 99 percent year over year. During Q2, which ended June 30, AOL generated $542.2 million revenue but lost $11.8 million, or 11 cents a share. The Street had expected AOL to earn 4 cents a share. A year earlier, the company lost $1.06 billion, or $9.89 a share.

AOL tired to put a positive spin on the numbers, both in its earnings release and today's earnings conference call. The company led with advertising and praise for contributions made by its acquisition of Huffington Post in February. AOL also purchased TechCrunch, in September 2010.

"In Q1, we grew display revenue for the first time in four years", AOL CEO Tim Armstrong said during this morning's conference call. "The Q2 display revenue continued to grow and for the first time in three years, AOL grew global advertising revenue. These are important steps in the come back of AOL and demonstrate the tough work we have done to fix the company and it is having an impact. Revenue growth will precede profit growth and we have revenue growth on the move".

While display advertising grew 14 percent year over year, it declined by 16 percent internationally. Search and contextual advertising plummeted by 21 percent.

AOL couldn't gush enough about Huffington Post, in the press release and on the earnings call. "The Huffington Post traffic surpassed The New York Times during the quarter and passes nearly 10 million monthly unique users", Armstrong said. AOL launched 17 new sites during the quarter, mostly from the Huffington Post Media Group. "In the consumer side area, we launched AOL Healthy Living, Huffington Post Canada and Huffington Post U.K., Huffington Post Women, Huffington Post Celebrity, Huffington Post Parent, Huffington Post BlackVoices", Armstrong said. "We've been very busy in the content business".

But this calling out of Huffington Post's contributions left behind question: Where would AOL advertising revenue be without it?

"AOL is singularly focused on becoming the next great media company for the digital age, being rich, engaging and easy to find content and experiences for consumers and best-in-class environment for advertisers", Armstrong said -- and that might have been the wrong thing to say, in hindsight. AOL tried to be the next media company when it bought Time Warner more than a decade ago. Yahoo also tried to become a big media company and failed. Surely Wall Street remembers.

Whether right thing or wrong thing, investors showed their displeasure by bailing on AOL in a big way. Can tomorrow be any worse than today? Armstrong should hope not.

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