AOL sales continue to sputter

NEWS The soft Internet advertising climate is continuing to take its toll at AOL Time Warner, which said Monday that revenue at its America Online division will remain weak. AOL Time Warner, which is currently overhauling its troubled AOL unit, said that it expects 2002 revenue from advertising and e-commerce at the unit to be around $1.7bn, although sales could come in about 5 per cent lower. Earnings before interest, taxes, depreciation and amortization (EBITDA) are expected to be between $1.7bn and $1.8bn. That $1.7bn sales target is in line with some analysts' expectations, but represents a significant decline from the previous year, when AOL recorded $2.7bn in ecommerce and advertising revenue. A few analysts predicted that AOL's prospects will worsen. Goldman Sachs analyst Anthony Noto estimated that the division's fiscal 2003 revenue would drop even further to $1.35bn. Noto singled out AOL among other online media companies such as Yahoo, Lycos and Microsoft MSN, saying he believed "AOL will continue to cycle through lost contracts and other unsustained online advertising revenue sources." "Notably we do not believe the company will see year-over-year growth in online advertising before (the second quarter of 2003) at the earliest," he said in a research note. Margaret Kane writes News.com