PDA

View Full Version : You've Got Freedom: AOL ends ties with Time Warner



chloe
12-06-2009, 02:55 PM
Now investors are getting a chance to place bets on AOL. On Wednesday, Time Warner shareholders as of Nov. 27 will get one share of AOL for every 11 of their Time Warner shares. The next morning, AOL CEO Tim Armstrong is set to ring the opening bell at the New York Stock Exchange, and AOL will begin trading under the ticker symbol of the same name _ the one it had when it was known as America Online and used $147 billion worth of its inflated stock to buy Time Warner in 2001.

The parent company was even known as AOL Time Warner in the heyday. At the time, Time Warner thought its movie, TV and magazine content would benefit from ties with AOL's Internet access business. The media conglomerate announced AOL's spinoff in May after years of trying unsuccessfully to integrate the two companies.

AOL will initially be worth about $2.5 billion, based on the value of preliminary AOL shares that have been trading ahead of the formal spinoff this week. AOL will have no debt, and the company is profitable, though falling _ operating income dropped 50 percent to $134 million in the third quarter compared with last year.

In the past year, AOL hired Armstrong, a former Google advertising executive, to engineer a turnaround that eluded the company while it was part of Time Warner.

In those years, AOL struggled to complete its transition away from relying on its dial-up business. The service peaked in 2002 with 26.7 million subscribers, and has declined steadily as consumers switched to broadband. In the third quarter, AOL had 5.4 million dial-up subscribers, who paid an average of $18.54 per month.

Even with the decline, this business brought in $332 million during the quarter, or 43 percent of AOL's total revenue. But that's down from $1.8 billion, or 82 percent of revenue, during its peak quarter seven years earlier.

http://www.ksl.com/?nid=170&sid=8931652