Possible Yahoo Sale Puts Focus On AOL
Article Tools
Share This +
Possible Microsoft-Yahoo Deal Robs AOL of Likely Suitors
Monday, February 4, 2008
Microsoft’s $44.6 billion bid for Yahoo on Friday revived debate about AOL’s plan to remake itself as an online advertising company and whether it might too become a target for acquisition.
AOL has been on a tear assembling an advertising network called Platform A that is meant to be the basis for the company’s future growth. At the same time, discussions have surfaced occasionally at AOL’s corporate parent, Time Warner, over whether the subsidiary should be spun out in part or whole.
In November, new Time Warner chief executive Jeffrey Bewkes said he would consider selling parts of the company to enhance its “strategic advantage.” Time Warner’s stock has lagged for years as its merger with AOL in 2001 failed to live up to its promise.
INTERNET ENHANCED
Story Archives
AOL history
Virtual Tour
Other Coverage
- Microsoft Bids $44.6 Billion To Buy Yahoo
- Silicon Valley Insider: What MSFT-YHOO Means For AOL
- Financial Times: AOL faces tough fight as consolidation looms
- CNN Money: AOL's options darken with Microsoft's Yahoo bid
Living in LoCo Blog
- Oct. 15, 2007 -- AOL' s Falco Says 2,000 Layoffs
- Oct. 12, 2007 -- One AOL Exec Departs
- Sept. 17, 2007 -- AOL Employees Weather News of HQ Change
Advertisement
Among those that could take an interest in AOL include Google, which already owns 5 percent of the Internet giant and is in the process of buying online ad business DoubleClick. This weekend, Google made clear its concern about the Microsoft-Yahoo deal as it said that the bid “raises troubling questions” for “openness and innovation” on the Web. Another possible suitor for AOL is Rupert Murdoch’s News Corp., which has shown its willingness to go after big enterprises by buying such businesses as MySpace and Dow Jones.
Yet analysts were skeptical that a sale was in the cards.
The potential Microsoft-Yahoo deal “robs AOL of the two most likely and able suitors,” Michael Nathanson, an analyst at Bernstein Research, wrote in a note to investors. “As such, there appears to be no one on the horizon in need of AOL’s audience and Platform A capabilities that is willing to pay Time Warner a similar value.”
“We believe AOL is the odd man out,” Lehman Brothers analyst Anthony J. DiClemente and his team said in their own note.
AOL has spent more than $1 billion over the past year and a half to fortify its status as one of the largest providers of online advertising. AOL has bought companies specializing in all sorts of new-media advertising — including targeting Web surfers based on the sites they visit and people who browse the Web on their phones.
But the fruit of such labors has yet to be shown.
In the third quarter of 2007, AOL lost 851,000 subscribers to its dial-up Internet access business. Ad sales rose a modest 13 percent, but not enough to offset subscriber declines. Overall the unit’s profit declined 24 percent. Time Warner is set to report fourth-quarter results on Wednesday and has warned that AOL will face “continued downward pressure.” An economic downturn that depresses advertising budgets may only exacerbate the challenges.
Photo Gallery
America Online
In April 2007, AOL President and Chief Operating Officer Ron Grant addressed the media in Bangalore, India. (FILE PHOTO) (Dibyangshu Sarkar/AFP/Getty Images)
AOL Chairman and CEO Randy Falco speaks during the Reuters Global Technology, Media and Telecoms Summit in New York on May 16, 2007. (FILE PHOTO) (Keith Bedford/Reuters)
AOL Chairman and CEO Jonathan Miller along with AOL Vice Chairman Ted Leonsis -- who is the majority owner of the Washington Capitals, Washington Mystics and minority owner of the Wizards -- met with The Washington Post to discuss AOL's new business model in 2006. (FILE PHOTO) (Leslie Walker/Washington Post)
An employee walks through one of the doors inside the lobby of AOL headquarters in November 2004. (FILE PHOTO) (Joe Raedle/Getty Images)
This 2006 photo shows the annual company volunteer day at AOL headquarters in Dulles. AOL employees packaged more than 2,000 bags for The Red Cross, Loudoun Family Services, Loudoun Literacy Council, and Emmaus Services for the Aging in D. C. (FILE PHOTO) (Tracy A. Woodward)
YouthAIDS Global Ambassador Ashley Judd spoke to more than 300 America Online employees at the company's headquarters in 2005 to promote HIV/AIDS education and prevention. (FILE PHOTO) (Tim Nguyen/AOL)
AOL and Advertising.com executives gather at AOL headquarters in 2004 to talk to the media. The companies announced that AOL had agreed to pay $435 million to acquire Advertising.com, a provider of interactive marketing services. In photo, left to right: Advertising.com CEO Scott Ferber; Advertising.com Chief Product Officer John Ferber; AOL Vice Chairman Ted Leonsis; AOL Chairman and CEO Jonathan Miller. (FILE PHOTO) (Rick Kozack for AOL)
The photo for this illustration was taken in New York in 2006. Here, a collection of compact disks containing promotional software for AOL's Internet service is shown. (FILE PHOTO) (Mark Lennihan/Associated Press)
In 2003, then-Virginia Gov. Mark Warner speaks during gathering at AOL headquarters in Dulles prior to the ceremonial signing of an anti-spam bill. Shown listening to Warner is, from left: AOL executive Ted Leonsis; president of the Northern Virginia Technology Council, Bobbie Kilberg; Virginia Attorney General Jerry Kilgore and Virginia State Rep. Jeannemarie Devolites. (FILE PHOTO) (Rich Lipski)
This 2002 photo shows the outside of AOL headquarters in Dulles. (FILE PHOTO) (Kenneth Lambert/Associated Press)
In this Dec. 11, 2001 photo, Robert Pittman, chief operating officer of AOL Time Warner, presents his keynote address to Internet World Fall 2001 at New York's Javits Convention Center. (FILE PHOTO) (Richard Drew/Associated Press)
This photo taken Feb. 29, 2000, shows AOL Chairman and CEO Stephen Case, left, and Time Warner Chairman and CEO Gerald Levin as they prepare to testify before the Senate Judiciary Committee in Washington, D.C. about the merger of AOL and Time Warner. (FILE PHOTO) (Mario Tama/AFP)
AOL CEO Gerald Levin is shown speaking before the House Commerce Telecommunications Subcommittee in Washington in this September 27, 2000 photo. (FILE PHOTO) (Brendan Mcdermid/Reuters)
In this 2000 photo, Steve Case, left, Chairman and CEO of America Online, hugs Gerald Levin, Chairman and CEO of Time Warner, following a press conference in New York during which the two companies announced that AOL would buy Time Warner for about $163 billion in stock. At the time, the merger was considered to be the biggest business deal in history. (FILE PHOTO) (Mike Segar/Reuters)
This 1999 photo shows James V. Kimsey, founding CEO and Chairman Emeritus of America Online. (FILE PHOTO) (Philip Bermingham Photography)
In this March 13, 1995 photo, Microsoft CEO Bill Gates, left, and America Online CEO Steve Case address the Microsoft Professional Conference for the Internet. (FILE PHOTO) (Lou Dematteis/Reuters)
Signs inside the lobby of AOL's Dulles headquarters are seen in this 2004 photo. (FILE PHOTO) (Joe Raedle/Getty Images)
The lobby inside AOL's headquarters is seen in Dulles. The firm, which is owned by media giant Time Warner, has seen its number of subscribers shrink in recent years amid fierce competition. (Joe Raedle/Getty Images)
Last year, AOL’s online ad sales slightly eclipsed Microsoft’s, according to eMarketer, though it fell short of Yahoo’s and Google’s. A combined Microsoft-Yahoo entity would rival Google’s sales and trump AOL’s many times over.
“Whenever two major players get together, it makes it a little tougher for the remaining players,” said Colby Atwood, president of Borrell Associates.
That said, AOL has taken a number of steps that analysts have liked, including putting Curtis G. Viebranz, chief executive of Tacoda, an online advertising concern AOL bought, in charge of the company’s advertising operation. And AOL has revamped its portal and is rolling out dozens of products to capture visitors, building on the substantial audience it already has.
“Money follows the eyeballs,” said Kevin Lee, chairman and founder of Didit, a large online advertising buyer. “Media buyers are agnostic as to who gets the dollars as long as it’s working for them.”
Tagged: AOL, business_news
Deal of the Day
$25 Off House Cleaning From Maid To Please!
Maid To Please is offering LoudounExtra.com readers $25 off their first house cleaning, or $10 their third house cleaning.
• View all deals from Maid To Please | All deals
Latest Deal
• $25 Off House Cleaning From Maid To Please! posted: 4/28/09
|
Search Deals and Business Directory |
Your Thoughts...
Are you happy that the school year is over?
Comments:
Note: LoudounExtra.com does not necessarily agree with comments posted below — responsibility lies with the relevant reader alone. Peruse our reader agreement and privacy policy
Dont have an account? Sign up!
Post a comment