America Online Latin America Inc.’s revenue dropped during its second quarter, ended June 30, due mainly to weak advertising sales and currency devaluation. However, the company managed to dramatically narrow its net loss thanks to a sharp reduction in cash utilization, the company said Tuesday.
Wall Street reacted negatively to the company’s earnings report, which came out Tuesday morning before the financial markets opened in New York. The stock (AOLA) closed Tuesday at US$0.81 on the Nasdaq SmallCap market, down US$0.08 from Monday’s close. It was still dropping in mid-morning Wednesday, trading at US$0.76.
The Fort Lauderdale, Fla., company, which provides Internet access and content in Latin America, generated US$17.7 million in revenue, down from $18.5 million in last year’s second quarter. Net loss was $29.9 million, or $0.22 per share, down 33 per cent from the net loss of $44.6 million, or $0.66 per share, in last year’s second quarter.
AOL Latin America’s membership rolls again shrunk during the second quarter as the company continues to shed subscribers who either don’t choose a paid plan after their free trial runs out or who don’t pay on time. The company closed the second quarter with about 625,000 members, down 21 per cent from the first quarter. The 625,000-member figure includes an undetermined number of members who are on free trial periods. The downward trend in membership is expected to continue for the remainder of the year, the company said.
AOL Latin America reduced the cash used in operating activities during the quarter by 63 per cent to $14.1 million compared with 2002’s second quarter, by renegotiating better terms with its telecommunications providers for network services and by reducing its network to fit its paying member base. The company now expects its available cash to last it into mid-2004.
AOL Latin America, whose biggest shareholders are AOL Time Warner Inc. and the Cisneros Group of Companies media conglomerate, offers services in Brazil, Argentina and Mexico and serves members of the AOL-branded service in Puerto Rico.