Time Warner Reclaims Google’s Stake In AOL

Clears way for spinoff

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Google may be great at search, advertising, and a lot of other things, but its investment strategies could apparently use some work.  Time Warner has bought back Google’s five percent stake in AOL – for which the search giant paid $1 billion in 2003 – for a mere $283 million.

A decent investment is of course supposed to appreciate in value, perhaps to the tune of at least seven or eight percent a year.  The $283 million price tag signals that an overall loss of 71.7 percent occurred, instead.  Oops.

It also looks like another part of AOL’s relationship with Google is set to end, since an SEC filing stated, "[W]e have agreed to use Google’s algorithmic search and sponsored links on an exclusive basis in the United States through December 19, 2010.  Upon expiration of this agreement, there can be no assurance that the agreement will be renewed, or, if the agreement is renewed, that we would receive the same or a higher revenue share as we do under the current agreement."

Anyway, although AOL is now once again a fully owned subsidiary of Time Warner, this development clears the way for Time Warner to spin off the brand.

Time Warner’s stock is down about 0.25 percent so far this morning, which puts it only a little bit behind the Dow and the Nasdaq.

Time Warner Reclaims Google’s Stake In AOL
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  • http://www.laokay.com Steve

    There could be perceived conflict of interest if Google were to have their ads on AOL’s pages and keep a 5% stake in AOL.

    I do believe that this was a good move as the loss in value of the stake in the company could very well be far less of that in income from AOL using Google’s ads.

    The expiration is just to keep their options open. After all if it doesn’t perform as AOL hopes for them, then that money they spent to take back the company will be still a win anyways as they got paid a billion dollars for it previously. It’s looks more like Google is taking a gamble here.

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