America Online Posts Record Sales

America Online Inc. on Thursday reported record fiscal first-quarter revenue and a $19-million profit, citing subscriber growth, improved subscriber retention and other factors.

AOL Chairman Steve Case said the world’s No. 1 online service, which said it had 9.4 million subscribers as of Sept. 30, will hit the 10-million-member mark by the end of November.

“This is ahead of schedule,” Case said in a telephone interview.

The Dulles, Va.-based company had net income of $19.16 million, or 16 cents per share, compared with a loss of $353.7 million, or $3.80 a share, in the same quarter a year ago. Last year, AOL took a charge of $385.2 million related to an accounting change.

The latest results included a gain of 4 cents a share from the sale of stock in search engine company Excite Inc. and AOL’s continuing business relationship with Excite.

The results were in line with analysts’ forecasts.

Revenue surged 49% to a record $521.6 million, compared with $350 million last year.

AOL said it added 821,000 members worldwide during the quarter, compared with a gain of 414,000 during the year-ago period.

In addition to an improvement in subscriber retention, AOL cited improved efficiencies in marketing and a decrease in the costs of service.

Marketing expenses in the first quarter of fiscal 1998 were reduced to $97.8 million, or 19% of revenue, from last year’s $150.2 million (on an equivalent basis), or 43% of revenue, the company said.

AOL said it began limited marketing in the last several months, two quarters after it reduced efforts to attract new members to focus on building up computer-network capacity to handle the increased load.

AOL shares fell $5.50 to $79.38 on the New York Stock Exchange. Trading closed before the earnings report was released.