Why HuffPost got a pass from AOL this year

why-huffpost-got-pass-aol-year
Tim Armstrong. (AP Photo/Kathy Willens)
Tweet Share on Facebook Share on Tumblr Print

The Huffington Post will post a $6 million loss on $100 million in revenue this year, Mark May, an analyst with CitiGroup Research, told Reuters' Jennifer Saba.

The number falls well short of AOL chief Tim Armstrong's projection at the time of The Huffington Post's acquisition that the property, bought for $315 million, would post "$66 million in operating profit in 2013 on $165 million in revenue," Saba writes.

AOL executives tell Saba the company has been intentionally reinvesting ad revenue, but some analysts gave a better reason for why shareholders don't seem too worried (this past year, in fact, the stock is up more than 40 percent, according to Saba).

Macquarie analyst Ben Schachter tells Saba the patent sale to Microsoft allowed the company to put a dividend in investors' pockets; but also that the dial-up subscriber business wasn't shrinking as fast as the company had predicted. Neither of these is expected to be a factor next year, though.

MORE ON CAPITAL

ADVERTISEMENT

"Going forward, things like The Huffington Post and the overall Brand Group will have to show they are real businesses and profitable," Schachter said. "I've been a broken record about it: Can they make content profitably? Up until recently the answer has been 'no.'"

Read the complete article here: http://goo.gl/IlgyxW