AOL looks like it is on its death bed. It shares plunged as much as 30% on weaker-than-expected quarterly revenues. The company reported revenues of $542 million, compared with $592 million a year ago.

Last year AOL said the decline in revenue was due to write-downs it had to take from the sale of social networking site Bebo. This year it attributed the short fall to weak display ads and search revenues.

However the company said overall advertising revenue grew for the first time in three years, rising 5% to $319 million, led mostly by its acquisition of the Huffington Post, which AOL bought for $315 million earlier this year.

In March 2011, AOL laid off 20% of its work force following its acquisition of the Huffington Post, saying that the layoffs were a critical step on the comeback trail for AOL. However, AOL never turned around or turned a corner. It wouldn’t surprise me if more layoffs are on the way.

AOL is still trying to play a search and display ad game on the desktop. In the meantime there is a fundamental shift by high frequency users moving to Apple’s iOS devices. Its been shown that user’s with Apple’s iOS devices perform less searches and view less display ads. This is bad for AOL and it can only get worse.

AOL’s  stock has lost half its value this year.