AOL CEO Armstrong Moving Full Steam Ahead with Patch
On the heels of winning a proxy showdown against a gang of grumbling shareholders yesterday, AOL CEO Tim Armstrong is punctuating his victory over that cabal of activist investors known as Starboard by pushing the very product they insisted was a poor business endeavor: AOL’s local news platform, Patch.
Although Patch has yet to return a profit for AOL, the platform started showing signs of life last month by setting a new record in both traffic and revenue. Now, Armstrong appears to be taking the rebuke of Starboard’s attempted insurrection of the company’s board of directors as a license to continue developing the online local news service. “There are only two people in the U.S. investing in local news and information: me and Warren Buffett,” Armstrong told The New York Post.
While Patch is expected to have its best year yet in 2012 by generating $40 to $50 million in revenue, Armstrong expects that the platform will finally be producing a profit by the end of 2013. He said two key components to turning Patch into a source of profit involve increasing consumer engagement as well as developing new ways to monetize the expected growth in traffic.
Meanwhile, Starboard took a break from licking its wounds after yesterday’s vote and sold off more than 425,000 shares of AOL in the aftermath, sending the company’s stock falling 5.7%. Way to lose with dignity, guys.