AOL Shares Up On Higher Profits
Shares of America Online rose higher Thursday after the company reported a fiscal second-quarter profit that topped analysts' targets, and it set a 2-for-1 stock split.
Shares climbed 8 15/16 to close at 174 7/16 Thursday.
AOL (AOL) said after the market closed that its profit soared 340 percent to $88 million, or 17 cents a share, vs. $20 million, or 5 cents, in the same period a year ago. (Editor's note: CBS News is the broadcast news provider for America Online.)
Analysts surveyed by First Call estimated Dulles, Va.-based AOL would make 14 cents.
Sales jumped to $960 million from $592 million in its second quarter of 1998. AOL said it added 1.6 million new members during the quarter, upping its membership base to 17 million.
The Internet bellwether also set a 2-for-1 stock split for those who own AOL shares Feb. 8. The stock split will take effect Feb. 22.
"By making ownership of our company more accessible to the average investor, we hope to enable as many people as possible to share in the future growth of America Online," Chief Executive Steve Case said in a statement.
The split will be AOL's sixth in its seven-year history as a public company. The stock, which closed up 7 to 162 before the news was released Wednesday, has doubled since December.
AOL said its members spent $1.2 billion during the holiday season with retailers through America Online services. Sales from advertising and e-commerce for the quarter rose to $126 million from $54 million in the year-ago quarter.
Executives made it clear that e-commerce is a top priority for the company. They said two-thirds of their members were "very satisfied" with their online shopping experiences through AOL, and that three-quarters are "very likely" to shop online within the next six months.
AOL's executives made it clear in a conference call that providing members with an easy online shopping experience is a top priority.
Executives said AOL's purchase of Netscape (NSCP) and working with Sun Microsystems (SUNW) will develop new technologies to make online shopping easier.
"Anybody who's online is not going offline," said President Robert Pittman.
In addition, the company said it still expects its purchase of Netscape to close in the early spring. Currently, AOL and Netscape are working on launching the next Netcenter and smoothly combining the companies so they can "hit the ground running," Pittman said.
Written By Tiare Rath, CBS MarketWatch