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AOL reported fourth quarter earnings that highlight a company in the middle of a restructuring, but showing some progress. Revenue, however, continues to slide.

The company reported fourth quarter net income of $66.2 million, or 61 cents a share, on revenue of $596 million, down from $806.7 million a year ago. Wall Street was looking for earnings of 46 cents a share on revenue of $587 million.

For 2010, AOL reported a net loss of $782.5 million, or $7.34 cents a share, on revenue of $2.42 billion, down from $3.45 billion in 2009. AOL took a $1.41 billion goodwill impairment charge that hurt 2010 results.

In a statement, AOL CEO Tim Armstrong said the company improved its balance sheet, launched new products and revamped its culture. “We have set aggressive goals for ourselves in 2011 in pursuit of capturing the growing opportunity ahead of us,” said Armstrong. Indeed, Business Insider posted a large presentation on AOL’s content plans.

On a conference call, Armstrong laid out AOL’s year ahead.

On my radar screen for 2011, there’s three main areas that I’m focused on. Number one is growth if traffic. Number two is growth in display. Number three is growth in local. Traffic growth will come from organic areas across AOL as well as deals and partnerships that increase our distribution. My expectations, creativity and great design go hand in hand with traffic growth. You are also seeing us build deals and partnerships with the most talented people on the planet and the best entrepreneurs. We have interesting results coming from our new organizational design around content towns and we are also seeing market demand for our content and network engines in the creation and the distribution of content. Growth in brand advertising is going to come from differentiated ads and consumer experiences. Many of us witnessed the birth of online advertising in the ’90s, the growth of search advertising in the last decade, and the time is right for the birth of brand advertising on the Internet. There is currently a race to the bottom of the marketing funnel, search had had been the lowest point of traditional marketing on that funnel but then social acquisition came in underneath search and now couponing has come in underneath social acquisition. As a brand or agency in the ad business, if your only way to introduce customers to your brands is through price or acquisition targeting, you may wake up and realize you have deflated your brand value and pricing value.

AOL is a work in progress. Ad revenue was down 29 percent in the fourth quarter as AOL revamped its sites. Subscription revenue fell 23 percent in the fourth quarter. Meanwhile, AOL is buying companies like Pictela, About.me and goviral A/S to retool and stepping up its video efforts.

The company reported 112 million average monthly unique users on AOL Properties.

Source: AOL Fourth Quarter: A Restructuring in Progress

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