On May 31st, BloggingStocks' parent company, Time Warner Inc.'s (NYSE: TWX) president Jeff Bewkes publicly mused about taking AOL public, according to paidContent.org.

Bewkes noted that AOL was at a competitive disadvantage due its lack of an "internet public currency." While that currency enabled AOL to offer $166 billion in stock to buy Time Warner back in January 2000, what would it be worth today?

$24 billion. That's one guess made by multiplying my estimate of AOL's 2007 revenues of $6 billion -- calculated by quadrupling AOL's Q1 2007 revenues of $1.5 billion -- by a price/sales ratio of 4. The latter is based on a review of the price/sales ratios of comparable pure-play internet content firms such as:

• Yahoo! Inc. (NASDAQ: YHOO): 5.9
• CNET Networks, Inc. (NASDAQ: CNET): 3.5
• Baidu.com Inc. (NASDAQ: BIDU): 37.1

I think such a public offering could unlock value because at $24 billion, AOL would be worth 30% of TWX's current $80 billion market capitalization, even though it represents only 12.5% of TWX revenues and a mere 4% of its assets. Moreover, AOL stock could motivate staff and fuel acquisitions.

Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in Time Warner stock.

What is AOL worth? originally appeared on BloggingStocks on Mon, 04 Jun 2007 19:00:00 EST. Please see our terms for use of feeds.