Time Warner sets AOL spin-off; Separation 'best outcome'; Worth $5 billion?

Time Warner sets AOL spin-off; Separation 'best outcome'; Worth $5 billion?

Summary: AOL will be an independent publicly traded company again as Time Warner solidified plans to spin off the ailing unit, which some analysts estimate to be worth about $5 billion.In a statement Thursday, Time Warner put more meat on its plans to spin off AOL.

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TOPICS: Google
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AOL will be an independent publicly traded company again as Time Warner solidified plans to spin off the ailing unit, which some analysts estimate to be worth about $5 billion.

In a statement Thursday, Time Warner put more meat on its plans to spin off AOL. Executives stated that the AOL separation would occur on its last earnings call. In addition, Time Warner named former Google exec Tim Armstrong CEO in March.

Under Time Warner's plan shareholders will get shares of AOL in a tax-free transaction. In the meantime, Time Warner will buy back the 5 percent interest in AOL that Google owns in the third quarter. Time Warner said it plans to complete the spin-off "around the end of the year." Benchmark analyst Frederick Moran reckons that AOL is worth about $5 billion, or $4 per Time Warner share.

Here's how Moran comes up with his $5 billion figure:

  • AOL's dial up business is worth roughly $1.5 billion based on the valuation of EarthLink;
  • AOL's ad group, including Platform A, is worth $3.8 billion.

Despite its troubles operating inside of Time Warner, AOL still has a lot of assets at its disposal. AOL has 107 million unique visitors a month, display ad networks and a declining Internet access business that still throws off cash.

Time Warner CEO Jeff Bewkes said:

We believe AOL will then have a better opportunity to achieve its full potential as a leading independent Internet company.

Armstrong said:

Becoming a standalone public company positions AOL to strengthen its core businesses, deliver new and innovative products and services, and enhance our strategic options. We play in a very competitive landscape and will be using our new status to retain and attract top talent. Although we have a tremendous amount of work to do, we have a global brand, a committed team of people, and a passion for the future of the Web.

As an independent company AOL will be able to acquire Web properties with its own stock, pursue transactions for its Internet access business with EarthLink and generally be more nimble.

Topic: Google

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16 comments
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  • $5 Billion??? Are They Crazy??

    AOL isn't worth $5, let alone $5 billion. It has been a millstone around the neck of Time Warner for almost a decade. After the spin off we should soon see AOL's well deserved demise.

    Good Bye AOL. Good Riddance. You will NOT be missed.
    sismoc
    • Why the vitriol?

      AOL did make the net easy and useful for people. I never used it, but knew many that did. They rested on their laurels and will likely fade to black, but I don't understand why there is so much distaste and hatred for them.

      TripleII
      TripleII-21189418044173169409978279405827
      • AOL's still around? lol...

        [i]Why the vitriol?[/i]

        Probably because media behemoth Slime Warner used to own them and their software infected people's machines with so much crapware and bloatware to the point where system performance was clogged with so many of AOL's services running in the background.

        They represent the epitome of loading new machines with pre-installed crap, forcing many to re-image their machines right after buying them.

        Nope, I won't miss them. Hopefully somebody will put a corporate bullet into their heads, once and for all.
        Wintel BSOD
        • Big deal

          press start, run, msconfig, startup, untick the two processes that start up - done. In most of the 90's in our area AOL was the only service that had a local dial up number. To this day I still have some in my group that AOL works best for for the all in one online way their software is.
          Northlite
        • Here Here!!!

          As a former AOL user and current PC installer I couldn't agree more with
          AnythingButVista's comment.
          thatcomputerman
          • Absolutely Agree!

            They were everywhere. Buy a game or something on CD and it would install an icon for "Free AOL trial". Wasn't it even on the Windows OS discs?
            sctirvn687@...
          • See? -- People know what I'm talking about

            Those AOL programs (from those free discs) used to infect everything. Control Panel, the registry, the desktop, the service tray, the start menu, multiple AOL-related folders would be created under Program Files. It literally wanted to take over your machine.

            Only the most clueless and dumb would continue to use it and pay for their internet services when you could save money and get a local internet service provider (back then, using Netscape or IE as your browser) or get it bundled with your cable bill. No need to pay more or pay for something twice like I saw some people do.

            So the only way to fully get it off your machine was to do a clean install. What a real time-waster. I had better things to do.

            It's too bad the OEMs still insist on putting that garbage on new machines.
            Wintel BSOD
    • Good for some

      My mother still uses AOL and so does a friend's sister who is special needs. That is not meant to be a joke, but that is what AOL brought! I never used it. Hated it. But I am a techie and the web was made much more accesible by AOL for alot of people. Oh, and before the shipped those PIA CD's, they shipped lots of floppies! I think I had about 100 of them recycled for work use!! :-)
      Frankmjr
  • RE: Time Warner sets AOL spin-off; Separation 'best outcome'; Worth $5 billion?

    Hmmmm....Does this mean the client will no longer be free? Dial-up and Broadband AOL at a monthly rate? I can subscribers leaving to other ISPs.
    larry.morey@...
  • Would you like a side of AOL installation CDs with that purchase? (NT)

    .
    kozmcrae
  • RE: Time Warner sets AOL spin-off; Separation 'best outcome'; Worth $5 billion?

    AOL will always be the ISP of choice for millions who enjoy the ease in using the many features they offer.Count me in!
    Nell Virginia
  • $142B well spent.

    Bought for $147B. A few people got very rich off this one.

    TripleII
    TripleII-21189418044173169409978279405827
  • RE: Time Warner sets AOL spin-off; Separation 'best outcome'; Worth $5 billion?

    I continue to use v6 BB -- Before Bloatware -- for my mail. It's surprisingly resistant to malware,

    But AOL destroyed its Message Communities, one of its strong points, in the name of pursuing advertising revenue which proved a chimera.


    JJB
    JJ Brannon
  • RE: Time Warner sets AOL spin-off; Separation 'best outcome'; Worth $5 billion?

    Traffic to AOL branded sites..... because they are set as default with HP/Compaq machines.

    Spiral downward....... AOL = Juno/NetZero
    kipster1701@...
  • about time, now they can begin innovating again....

    personally i've been waiting for years for aol to strap their software to a linux kernel and call it an internet device.
    brokndodge@...
  • the day AOL bought Earthlink and doubled my cost was when i left and bought

    high-speed for $5 more.
    true, i was tied to that one high-speed line, but decided to leave AOL in the dust anyway.
    if they would offer a roaming high-speed connection, i might consider going back.
    but with wifi so prevalent these days, i probably won't.

    :)
    .

    wessonjoe