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AOL May Be Worth More Than You Think

March 20, 2008
by Steve Rosenbush
Blogger, Inside the Deals, paidContent.org

Steve Rosenbush

Long-suffering AOL may be worth more than some investors think. Last fall, UBS analyst Mark Morris pegged the value of Time Warner’s AOL unit at $13 billion, a mere 2.5 times revenue. That pessimistic view reflects AOL’s declining revenue, which fell 33% last year to $5.2 billion.

A lot has changed during the last few months. Oh, AOL’s revenue still is on the decline. But Microsoft’s offer to buy Yahoo for $42 billion has pressured its rivals. That bid, currently worth about six times Yahoo revenue, shows that even mature Internet companies have plenty of appeal to the right strategic buyer. And the pressure on Time Warner to sell AOL never has been greater. Its shares are trading at $14, down from $22 last year.

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