October 14, 2011 by staff
Yahoo! Aol, AOL CEO Tim Armstrong Inc has met with the principal shareholders in the last couple of weeks to promote the idea of ??a sale to Yahoo Inc. that could squeeze and 1.5 billion of cost savings, according to sources with knowledge of the discussions .
While Yahoo’s own strategic review AOL has beaten a background to many on Wall Street, Armstrong is still trying to get shareholder support for a deal with Yahoo, presenting it as an alternative to going it alone as a media company Internet.
“The focus of the meeting has passed a year ago to be close to the basics now how could carve this, what assets are worth separately, there are ways to sell the business to extract value from them,” AOL said a top 20 shareholders who attended one meeting.
Armstrong said that a merger between AOL and Yahoo could drain and 1 to 1.5 billion and saving the overlap of duplicate data centers and news sites, such as sports, entertainment and finance, according to another shareholder Reference met with Armstrong.
It is promoting the idea that a combination with Yahoo could appease the advertisers looking to purchase more efficient with a wider audience, said the two shareholders.
They said they liked the idea of ??a merger with Yahoo, but it remains to see if Armstrong can take place.
Armstrong’s defection from Google Inc to AOL in 2009 had raised hopes of investors that could revive a fallen giant, once famous for connecting the world of the Web.
AOL recruited by advertising sales value, Armstrong wants to turn the company into one of the main destinations of the media dependent on advertising revenue, after a disastrous merger of 10 years with Time Warner Inc.
But so far, it seems difficult to achieve when AOL has to compete for advertising dollars against the likes of Facebook and Google, Yahoo, besides himself.
In August, AOL reported a surprise quarterly loss, blaming weaker than expected growth in advertising. The shares fell 31 percent.
AOL, Yahoo and Microsoft in mid-September ad formed an alliance to go against Google, according to the blog AllThingsDigital.
A Yahoo deal could serve as a form of Armstrong to bow out gracefully. The idea is not new – that was launched when Microsoft Corp. made a bid for Yahoo in 2008 and reappeared last year, when AOL hired Bank of America and Allen & Co to discuss alternatives.
“As the desire for an output Armstrong not want to be doing what 18 months from now. He wants to be,” said a source familiar with the thinking of Armstrong. “It’s a type of man is ambitious and AOL as an afterthought. But definitely put his hat in the ring to run a combined Yahoo / AOL.”
Although Armstrong’s performance has disappointed many shareholders, some are not yet ready to throw overboard.
“He is in the sixth inning,” said the 20 shareholders of AOL. “It’s not fair to grade him right now, but I think the investment community is a bit disappointed. There is a strong desire to see tangible results.”
AOL declined to comment for this story.
Yahoo and AOL have many common shareholders as of June 30, including Capital Research, BlackRock, Vanguard and State Street.
Fidelity Management and Research Co, no two shareholders AOL June 30, reduced its stake in AOL to 3.7 percent from 10.3 percent, according to a regulatory filing Tuesday.
WHAT’S BLACK AND WHITE …
Shares of AOL has sunk more than 40 percent since it was spun off from Time Warner in 2009, ending what is widely regarded as one of the worst corporate mergers in history.
What was supposed to be a new media company is looking more and more old media like newspapers.
AOL and newspapers are trying to implement income-based digital news and information, but both are yoked to the inherited property, the dial-up Internet access business and media, respectively.
“Dead money” is how another investment banker media described the situation of dollars resulting from the rapid decline of dial-up access and print newspapers.
AOL has invested heavily in the news, and some 160 million this year in the construction of its line of local patches of the news network and its 315 million and the acquisition of the Huffington Post.
Subscription revenues, which represents about 38 percent of AOL’s total revenue in the first six months of 2011, is expected to decrease by 23 percent this year, estimates the Benchmark Co.anlyst Clayton Moran.
Moran expected to AOL advertising revenues will grow by 1 percent to 2 percent this year.
“There is a race to grow the digital business before the underwriting business away and are now losing that race,” said Moran.
There are still some who believe in AOL, as exists in the newspaper business. Dallas investment firm Hodges Capital Management holds shares in the New York Times Co., Gannett Co. and AH Belo on the idea that there is always a need for content.
However, when asked if the company would consider investing in AOL, Derek Maupin Hodgesanlyst said it was hard to say. “We looked at many ideas as possible. You never know what is going to deliver.”
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