Two Opposing Strategies Deliver Profits for AOL, LinkedIn

It’s the time of year for quarterly earnings reports, summing up 2012 for many tech companies that have faced drastic market transitions throughout the year.  In a shaky market and the ever-looming “tech bubble,” there are still companies that did pretty well during the previous quarter.  AOL was a surprising success story for 4Q, while LinkedIn maintains a steady business model for networking professionals.

LinkedIn continues to soar

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Launching an IPO is quite a gamble for social media companies today, many, such as Facebook, are trading below their initial public offering price.  But LinkedIn continues to astound investors, delivering fourth quarter earnings above expectations.

LinkedIn, which has 20 million account holders, posted revenue of $972 million in 2012, earning $11.5 million, or 10 cents per share, during the final three months of last year.  It is a 66 percent increase from $6.9 million, or 6 cents per share, a year earlier.

Revenue soared 81 percent from the previous year to $304 million.  Unlike Facebook, which relies heavily on advertising for its revenue, LinkedIn is not so dependent on marketing schemes.  Only 27 percent of its revenue came from advertising and the rest comes from the various tools that it sells to help recruiters glean more insight from its user base of professionals.

LinkedIn’s stock has tripled from its IPO price of $45 to $135.80 in extended trading after the numbers came out.  That’s a surge of $12.11, or nearly 10 percent.

AOL beats expectations with $600M revenue

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After years of decline, AOL has finally caught a break.  The web portal posted 4Q revenue of $599.5 million on earnings of 41 cents per share.

Advertising was the biggest contributor to its revenue, which grew by 13 percent to $410.6 million.  That number is divided into three parts: display ads which reeled in $169.8 million; search ads which it offers in partnership with Google increased by 17 percent to $103.6 million; and ad revenues from third-party networks increased by 31 percent to $137.2 million.

AOL’s Membership group, or its Subscription business, which includes AOL Mail, subscription services, AIM and related items, is still AOL’s major earner at $230.8 million, but it declined by 9 percent compared to 2011’s $254 million.

As for AOL’s legacy dial-up Internet access business, it brought in $174.2 million, a decline of 10 percent, as people opt for better services.  But the decline is said to be getting slower as AOL keeps finding ways to add other value for its subscribers.

About Mellisa Tolentino

Mellisa is a staff writer for SiliconAngle, covering social and mobile news. She is fascinated by technology and loves imparting what she learns through her journey as a writer. Got a news story or tip? Send it to mellisa@siliconangle.com