UPDATE, 7:18 AM: ”This is a significant milestone for us and for the future of the company” CEO Tim Armstrong said this morning after his victory over Starboard Value’s Jeffrey Smith at the shareholder meeting in Boston. He called the election of the management-endorsed board candidates “a clear indication” that investors “believe the value of the company will be larger in the future than it is today.” That doesn’t mean the criticism will end. “There’s going to be a noise layer for the business on a go-forward basis because we’re in the media business.” But he intends to be “very careful about costs, very careful about revenues.” Meanwhile, AOL wants to add two members to the board: an exec with experience in the tech-mobile world, and another with financial or technical operating skills. Armstrong says he’d consider the Starboard Value candidates — but it sounded like they shouldn’t hold their breaths. “We have other shareholders who have been putting in nominees,” he says. Also the company has hired exec search firm Spencer Stuart. Armstrong expects to close the process “within the next 12 months.”

On a separate matter, Armstrong says that ”there are (advertising) dollars moving directly from TV to the Web” following the effort by AOL and other tech companies to sell their video platforms in the television upfront market. As broadband become a more important pipe for video, “we’re probably going to be the first pioneer to attack this in an aggressive manner.”

PREVIOUS, 6:32 AM: So much for Starboard Value CEO Jeffrey Smith’s campaign to win three of the board seats at AOL. The Internet company says that the preliminary results from its shareholder meeting this morning show that all of the management-endorsed candidates won. Smith, a hedge fund manager who controls 5.3% of the voting shares, said that the company had not paid enough attention to its investors and was wasting money on big new initiatives such as AOL’s Patch collection of local news sites. Smith urged shareholders to vote for himself, investor Dennis Miller, and Jim Warner of digital marketing advisory firm Third Floor Enterprises. AOL chief Tim Armstrong countered that the company’s on the right track for long term growth, and Smith would derail that by pushing the board to focus on short term results. AOL shares are down about 3.6% in early trading after the vote. Here’s AOL’s statement about the results:

“On behalf of AOL’s Board and management team, we want to thank our stockholders for their strong support throughout this process. Over the past few months, we have met with many of our stockholders and greatly appreciate their feedback as well as their commitment to AOL. We intend to be responsive to the messages we heard from our investors and will continue our plans to pursue adding two new independent directors to the Board, who we believe will add additional expertise and relevant perspectives to further enhance the strength of our Board. Today’s outcome reaffirms our strong belief that AOL has the right strategy and team to successfully execute on our plan to continue to deliver enhanced value for all stockholders.”