AOL (AOL) has been independent from Time Warner (TWX) for two weeks and I have gotten used to the multiple logos. Probably of greater significance is that the the stock is trading at $24, just above where it ended in after hours trading its first day -- Yippee! (my loyalty prevents me from Yahoo!-ing).
Interestingly, the stock has not only been very stable in the last two weeks (to my surprise), but in examining the opportunities to trade various stock options there is very little anticipated volatility through July.
In my initial post, AOL, I mean Aol, did not tank! I shared some concerns I had about the stock, but that has waned. Actually I have done an about face and now believe AOL may be of greater value in twelve months.
Even if AOL as is does not catch fire with investors, at a current capitalization of around $2.5 billion, I feel it may eventually get taken over by Microsoft (MSFT) or Google (GOOG). Each should likely want to keep AOL out of the hands of the other. If Microsoft once thought Yahoo! (YHOO) was worth $25 billion, it is not hard to imagine that company having an interest in AOL at one-tenth the price.
I have given some thought to including AOL in the Chasing Value: Ten stocks for 2010 -- Part 10. But I decided my objectivity would be in question, so I did not.
And -- getting back to my about-face on logos -- I now find the very playful group of alternating images is attention grabbing. Although I had my doubts at first, it works because through all the images the "Aol." remains the focal point.
| Yes | |
|---|---|
| No | |
| 10% higher | |
|---|---|
| 20% higher | |
| Flat | |
| 10% lower | |
| 20% lower | |
| It will be acquired. |
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture and planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I do not own any AOL stock at time of publication.
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Reader Comments (Page 1 of 1)
12-24-2009 @ 1:45PM
sgentilejr said...
The only problem with AOL was Time Warner. Now that it is free again and once again being managed by a man with vision it will slowly return to it's rightful position in the Internet World. As mentioned in the article above, Microsoft offered over $25 billion for Yahoo and at that same valuation rate of $25 billion for AOL it would be $240 per AOL share. With only 105 million hares outstanding do not be surprised if this puppy is not over $200 per share in 2 years after they finish their restructuring and developing new products. I seriously doubt the government would allow either Google or Microsoft to buy out AOL, yet it could be a good fit for any cable TV service that would like to offer Pay Per view online movies. That is one way of getting any cable TV Network's product into millions of households nationwide without any satellite dish costs, street and home wiring costs and converter box costs. or even attractive to Verizon to match up with their Fios. The possibilities are endless and many people will be looking back in 2 years asking themselves "Why didn't I buy AOL shares when they were dirt cheap".
PS: In all honestly I am a now an AOL shareholder once again. Fortunately I sold my prior AOL share many years ago when the TW/AOL merger rumors began and before they declined like a rock. I guessed correctly that time and I believe (hope) I am correct again now. It is sad indeed that Steve Case's dream of Time Warner's vast library of magazines, books and movies were not all made available on AOL as pay per view content long ago as Steve Case dreamed about. Time Warner is the loser in this divorce since the circulation of their printed publications days are numbered, as circulation of all printed materials continues it's ongoing decline. 105 million is a very small number of outstanding share and if Demand investor ownership appetite for AOL shares increases this puppy could runaway and never look back.
12-24-2009 @ 5:56PM
william lindblad said...
Better that they are back on their own. So far, I like what I see also.
Happy holidays to you and all.
1-05-2010 @ 8:35AM
mgnm2000 said...
what has been overlooked in this spin-off
is the low number of shares issued in Aol
the panic selling of Aol shares that was expected
was a mirage...
It took 11 TWX shares in order to receive one Aol
share...
So,if you held a thousand TWX shares you had less
then a hundred Ail shares to sell.
hardly enough to start the stampede the street
was expecting
keep the faith