Earnings Call: AOL Margins Highest In Years But Cost Cutting Not Done
This story was written by Staci D. Kramer.
The incessant restructuring of AOL (NYSE: TWX) over the past couple of years finally seems to be paying off in at least one area: expenses are down and margins are at 39 percent, which CFO John Martin calls the highest level in years. But that's not enough for analysts and both CEO Jeff Bewkes and CFO John Martin hinted at the end of today's Q3 call that more cost slashing could be on the way. Analyst Imran Kahn wanted to know what else AOL could cut if advertising remains soft. Martin said the AOL management team would continue to manage costs with revenue in mind. On the access side, where the rate of decline is already moderating, "the variable costs have come down, marketing costs will continue to come down" but further savings will be less significant. "On the audience side, it's going to be based on active management decisions ... nothing I'm prepared to go into a lot of detail here on and as we decide how to grow the business and size the business accordingly." Bewkes jumped in: "We do think there are some areas where we can continue to cut costs and improve margins in AOL going forward and you'll be seeing that over time."
By Staci D. Kramer