AOL 'Just Getting Started' With Buybacks: CEO
Investors can expect future stock buybacks and increased value for AOL shares, Tim Armstrong, the company's CEO, said in an interview with CNBC's "Squawk on the Street." AOL reported earnings Friday that showed the first revenue growth in eight years.
"We have returned $1.5 billion to investors — about 50 percent of the company's market cap — in the past three years and we're just getting started," Armstrong said. "We announced a $100 million buyback today because we feel strongly that AOL is still a great investment."
Armstrong also added that he just eclipsed 5 percent holdings in AOL and said his position has benefited from both operational improvements and share buybacks.
"We're very excited about the future in advertising, because there is a tailwind of consumers still adopting digital services, the advertisers need to follow," he said, "we've positioned ourselves right in the middle of that disruption curve and you're seeing that in the results today."
AOL reported an increase of 13 percent in advertising revenue in the most recent quarter.
"We probably have the second largest asset in the advertising network space," he said, "more people getting into that space is because more ad dollars are coming in, which will lift all boats."
"We're announcing growth for the first time since the company was spun off from Time Warner," Armstrong said, "Our job at AOL is to move the company in the most non-commoditized space possible."
"Our three segment areas are profitable and we want to drive toward higher margins, higher profits there. You will see the margins widen and us grow as a company," said Armstrong. "Investors have rode with us through one of the most difficult turnarounds in American history and now it's up to us to turn that into a business of growing margins and revenue."
He said that the company is working to convert "membership" customers, such as dial-up subscribers, to "the future of the Internet." Armstrong added that "Investors have expected the membership group to go down, they've expected us to innovate on the other side of the business and today's results show the perfect marriage of those two things."
"Most of the major companies in the content and advertising spaces haven't hit a turnaround in [digital advertising] disruption," Armstrong said, adding that he thinks AOL is in the right position to take advantage of this change in consumer behavior. "These companies will have to follow us through this work."
—Reuters contributed to this report.