AOL - the truth is somewhere in the middle

AOL released its second quarter results this morning. And the consensus of the Street was that the results were not that good.

But you aren't going to find that in the first paragraph of AOL's press release. Invariably, an earnings release is written with as positive of a tone as possible, and the negative news is buried deeper within the release. So here's how the first paragraph of AOL's release read:

"AOL's return to global advertising growth for the first time since 2008 reflects the hard work of our team and another meaningful step forward in the comeback of the AOL brand," said Tim Armstrong, Chairman and CEO. "AOL is singularly focused on becoming the next great media company for the digital age and we have positioned the Company's best people, technology and assets in front of some of the largest opportunities on the internet."

However, as this Bloomberg article shows, investors were not necessarily looking for global advertising growth. Here's the first paragraph of the Bloomberg release:

AOL Inc. (AOL) had a record decline in New York trading after reducing its annual earnings forecast, raising concerns that the company may not be able to turn itself around following the 2009 spinoff from Time Warner Inc. (TWX)

Ah, yes, a reduction in an earnings forecast. In the AOL press release, this bit of news wasn't even mentioned. It came up in the subsequent conference call.

Oh, and AOL lost money. In the three months ending June 30, 2011, AOL lost $11.8 million. As is typical, this number is compared to the three months ending June 30, 2010, in which AOL lost $1.055 billion.

Yes, that's billion.

So in one respect, AOL is doing a lot better than it was a year ago.

But not good enough for the Street.

P.S. In case you're wondering how AOL's new properties reported the story, here's the TechCrunch post. Excerpt:

In a statement, AOL CEO Tim Armstrong says the company’s return to global advertising growth for the first time since 2008 is another ‘meaningful step forward’ in the comeback of the AOL brand.

That may well be the case, but the road to sustainable profitability is still long.

And here's how the Huffington Post covered the news.