NEW YORK AOL Inc is beginning to shows progress in display advertising revenue.

The company reported on Wednesday that first-quarter display advertising revenue grew for the first time in a little over three years, increasing 4 percent to $130.5 million.

It looks like they are starting to turn the corner on revenue, said Ross Sandler an analyst with RBC Capital Markets.

AOL, spun out from Time Warner about a year and half ago, has been trying to regain its former luster. Over a decade ago it was one of the Internet's most popular destination dominated by email.

Since the separation from Time Warner, AOL has been actively gobbling up media-related sites, including a $315 million purchase of the Huffington Post in February, cutting costs, and retuning its sales force.

It is a milestone quarter for us at AOL, said AOL Chief Executive Tim Armstrong on a conference call. I think those changes are really paying off.

Overall advertising revenue fell 11 percent to $313.7 million on declines in search and third-party network advertising.

Total revenue at the company fell 17 percent to $551.4 million. Analysts on average expected total revenue of $536.4 million, according to Thomson Reuters I/B/E/S.

I like these AOL numbers, said Laura Martin, an analyst with Needham & Co. I like the fact that (subscription) churn is lower. It really says the deterioration is slowing it will hold up earnings longer.

Revenue from dial-up subscriptions dropped 24 percent to $215.4 million.

First-quarter profit fell 86 percent to $4.7 million, or 4 cents per share, compared with $34.7 million, or 39 cents per share, a year ago.

AOL adjusted earnings per share of 22 cents beat the street's consensus of 19 cents per share.

(This story was corrected in fifth paragraph to correct amount to $315 million)

(Reporting by Jennifer Saba in New York and Himank Sharma in Bangalore; Editing by Unnikrishnan Nair, Dave Zimmerman)

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