AOL backs Patch.com to kick-off at the earliest, criticized for poor decision making, eyes financial statements

America Online, AOL, has been on an investment spree of late. The latest of companies is Patch.com local news business.

After humbling Starboard Value on three board seats, AOL has now started pure money in Patch. The project was immensely criticized by Starboard for a lack of proper business model to generate income but it is now time for AOL to prove that the new network can.

Latest figures from both AOL and Patch itself have revealed that the new online news portal has the potential to move forward with great rigor. In a conference call on July 25, Patch executives gave the green signal and also revealed profits estimates as compared to the current revenues vs. the year-ago figures.

Patch estimates that it will generate around $40 to $50 million in profits in the next one term. Moreover the current quarter is expected to show a 100 percent increase from the year-ago quarter.

The executive did not give the exact figures on the revenues but said that “as of June 1, we had booked 130% of the revenue for all of 2011.”

AOL’s financial backing in this regard is another plus to boost the company’s confidence.

“It was an affirmation that we’re doing something great,” says Patch co-founder Warren Webster, the former director of magazine publishing for Gannett (GCI). “We’ve been scrutinized up, down, left, right and sideways ever since we founded the company, and it’s because we’re doing something disruptive.

“This business is going to continue to evolve, and Patch is going to be a leader. We can’t tell you the end of the movie, but we know we’ll be profitable by next year.”

Then the company attracted criticism on advertisement model. Every newspaper or news portal has the survival strategy of generating profits. Patch has a different model to pursue. It is attracting local ads which are becoming a bull’s eye for those who think local adverts are for losers.

However, Webster is of a different opinion. “A majority of our advertising has been and continues to be local,” he said.

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Posted by Usman Khalid on Aug 4 2012. Filed under Sci-Tech. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.