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AOL to become a separate and publicly traded company

At one point, many internet users first came online using AOL. The ISP was the largest and most popular around thanks in part to the fact that the CDs multiplied like rabbits and could be found virtually anywhere.

AOL is a mere shadow of its former self thanks to cable and phone companies offering many consumers much faster broadband access compared to the slow and near useless dialup connection that AOL still pushes. Still, AOL has a large number of subscribers to its legacy dial-up service.

The AOL Time Warner merger in 2000 was hailed at the time as a deal that would make the new company into the largest media firm in the world. The merger ultimately failed to perform, Time Warner found it was forced to take multiple write-downs as the shrinking dialup user base that powered AOL dried up, and the AOL assets dropped in value.

In 2005, Reuters reports that the market value of AOL was pegged at about $20 billion when Google bought a 5% stake in the ISP. Earlier this year, AOL was estimated to be worth $5.5 billion. Time Warner has announced that it will purchase back the stake that Google owns in AOL and then spin the company off into a separate entity.

Time Warner CEO Jeff Bewkes said, "We believe that a separation will be the best outcome for both Time Warner and AOL. The separation will be another critical step in the reshaping of Time Warner that we started at the beginning of last year, enabling us to focus to an even greater degree on our core content businesses."

This isn't the first attempt by Time Warner to turn AOL, its worst performing unit, around. AOL was split into two units previously with one unit focusing on the audience and advertising and the other focusing on the dial-up subscribers AOL still serves.

Market Watch reports that AOL will be an independent and publicly traded company and 100% of the company will be spun off to its shareholders. On news of the spinoff, Time Warner shares gained five cents to $23.05 in morning trading.

Bewkes said that the spinoff would allow Time Warner to "focus to an even greater degree" on its core business assets. Those assets include its content business of TV and film production and its cable networks. When AOL purchased Time Warner in 2000, it paid $106 billion for the purchase. After the dot com bubble burst, the stock value fell in January 2000 to $71, and by July of 2003, the stock price was $8.70.

Time Warner hired new AOL CEO Tim Armstrong to prepare the company for spinoff and to find other ways to improve the business.

Armstrong said at the time, "The culmination of the 100-day process will end in Dulles [AOL's ancestral headquarters] with an all-hands meeting in mid-July. At that meeting, we'll review the feedback we've received -- both internal and external. ... Most importantly, we will set a course and focus all of our resources to make that course a success."

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Patio Chair
By JasonMick on 5/28/2009 1:32:51 PM , Rating: 4
This is great news, maybe now I will be able to collect enough junk cds to create that new patio chair I was planning...

I never cared for AOL much back in the day, but they did prove to be a wonderful source of floppy discs for my high school programming career. For that reason alone, I wish them the best of luck!

RE: Patio Chair
By phxfreddy on 5/28/2009 2:31:39 PM , Rating: 2
woo AOL.... talk about a pig in a poke.

On a side note AOL was really good for getting a quick poke in during its good years.

RE: Patio Chair
By phxfreddy on 5/28/2009 2:33:40 PM , Rating: 2
Sonofa!!! ... the linked stories above are worth taking a look at. Chair made out of CD's....and it looks GOOD!...damn that thing must be heavy.

RE: Patio Chair
By ggordonliddy on 5/28/09, Rating: -1
"It's okay. The scenarios aren't that clear. But it's good looking. [Steve Jobs] does good design, and [the iPad] is absolutely a good example of that." -- Bill Gates on the Apple iPad
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