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AOL profit beats forecasts, shares up

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CIOL Bureau
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CALIFORNIA, USA: AOL Inc's quarterly profit beat Wall Street forecasts on Wednesday and forecasted full year revenue growth, which sent its shares soaring as much as 16.5 percent.

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AOL's rise in display advertising revenue overshadowed a decline at its Internet dial-up business.

Chief Executive Officer Tim Armstrong said its Internet business may finally increase its revenue again in 2012.

"I would say it's a stretch, but we're going to stretch to get there," Armstrong said on a conference call with analysts. AOL has struggled since its spinoff from Time Warner Inc in 2009.

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Wall Street on average had on average forecast AOL's revenue to decline by around 5 percent in 2012 according to data from Thomson Reuters I/B/E/S.

AOL has been focusing on Web advertising, competing with Google Inc, Facebook and Yahoo Inc.

As part of its turnaround strategy, AOL bought Web brands including Huffington Post and TechCrunch.

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Earnings from continuing operations fell to $22.8 million, or 23 cents a share, from $66.2 million, or 60 cents a share, a year earlier.

Analysts on average expected AOL to post a profit of 16 cents a share, according to Thomson Reuters I/B/E/S.

Revenue dipped by 3 percent to $576.8 million.

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Credit Suisse analyst John Blackledge described the quarter as "soft, but improving, with revenue slightly above our estimates."

AOL's total advertising revenue rose by 10 percent to $363.8 million.

Overall display advertising -- big splashy ads that appear on Web pages and command higher rates -- rose 15 percent.

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"Everything is in place for now," said Miller Tabak analyst David Joyce. "They're growing advertising display on their own properties and network and continue to grow revenue on their local sites business Patch.com."

Subscription revenue from AOL's dial-up Internet access unit declined 18 percent. Its stand-alone dial-up access business accounts for only 11 percent of revenue with most revenue coming ancillary subscription services like Internet security.

Shares of AOL were up 14.5 percent at $18.57 in morning trading on the New York Stock Exchange.

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