• by Gavin O'Malley  @mp_gavin, February 1, 2012

Thanks to strong display advertising, AOL once again beat quarterly expectations.

Excluding select items, fourth-quarter profit hit 42 cents a share, while display advertising rose 15% year-over-year.

“AOL showed solid improvement in [the fourth quarter, particularly on cost controls in cost of goods sold,” Macquarie Capital analyst Ben Schachter remarked in a research note. “Additionally, access and search revenues at AOL.com both beat our estimates meaningfully, while display revenues at AOL sites were just in line with our forecast."

AOL head Tim Armstrong said Wednesday: “AOL took a large step forward in [the fourth quarter]. ... "Our [fourth quarter] results highlight AOL’s ability to methodically improve our consumer offering and financial performance.”

Armstrong is being credited with bolstering ad revenue with risky deals, such as the acquisition of The Huffington Post for $315 million, early last year. 

Last year, thanks to third-party network sales and enhanced premium display ad sales related to Project Devil, AOL proudly boasted an 8% jump in third-quarter ad sales.

For the fourth quarter, net income declined to $22.8 million, or 23 cents a share, from $66.2 million, or 61 cents, a year earlier, according to AOL. Still, AOL noted the total revenue decline was its lowest rate of revenue decline in 5 years.

What’s more, AOL grew global advertising revenue by 10% during the most recent quarter, which represented its third consecutive quarter of year-over-year growth.

The company also reported a 15% increase in global display revenue -- its fourth consecutive quarter of year-over-year growth. AOL saw 20% growth in third-party network revenue -- its third consecutive quarter of year-over-year growth, and sixth consecutive quarter of sequential growth.

AOL also reported the lowest rate of search and contextual revenue decline in about three years, which it attributed to growth in search revenue on AOL.com. Also, subscription revenue declined at the lowest rate of decline in five years --18% -- and monthly average churn of 2.2% continued the trend of year-over-year churn reduction.

Giving AOL’s earnings an extra pop, Google and Yahoo recently reported disappointing fourth-quarter revenue.