"NEW YORK - AOL made key mistakes that pushed down display-advertising sales and resulted in the Time Warner Inc. unit's first quarter of flat ad revenue since it began staking its future on the boom in online ads, executives said Wednesday.
AOL's troubles integrating $1 billion worth of corporate acquisitions into a single "Platform-A" should serve as a warning for Microsoft Corp. as it pursues an unsolicited bid for Yahoo Inc. now worth more than $40 billion.
"If Microsoft does buy Yahoo, a much larger company to digest (than the ones AOL has acquired), it will be many quarters" before the units operate tightly, said David Hallerman, a senior analyst with the research group eMarketer. "It's so hard to make that kind of change, to really integrate, when there have been all these silos."
Overall, AOL revenues fell 23 percent in the three months ending March 31, compared with the same period in 2007, according to Time Warner. With advertising making up only half of AOL's revenue, the 1 percent growth in advertising was not enough to offset the 38 percent plunge in subscriptions.
The 1 percent increase at AOL also was low compared with its rivals. During the first quarter, Google Inc. saw a 40 percent increase in online ads, Microsoft a 39 percent jump and Yahoo 7 percent."
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