Just four years ago Google made a big splash in the Internet space by buying a 5% stake in AOL for $1 billion. Do the math and that placed the valuation of the company at around $20 billion. The fall of AOL from an Internet powerhouse to a “will they ever be influential again?” story is one that Google now knows all to well. Bloomberg reports today that on July 8th Time Warner bought that 5% share back from Google for $273 million. The valuation of AOL is now placed at $5.66 billion. What a difference a few years makes, huh?
Google wrote off $726 million of that investment last year so the pain of the misstep is mostly in the past. It doesn’t mean that it doesn’t sting, however.
So how are things looking for AOL these days? With new CEO Tim Armstrong at the helm there seems to be some buzz about the potential but outside of the AOL PR storm it remains to be seen if there are any believers. An AOL spokesman went into no comment mode when asked about the valuation.
AOL has its work cut out for them and it appears that the worst is still not behind them.
Armstrong told employees last week that job cuts are possible as he undertakes a 60-day review of the Internet company’s cost structure.
Now that Armstrong has set the table, it’s highly unlikely that the ax won’t fall at AOL in the next 60 days. What’s it like at the company these days? Let us know if you are there to sweat out the ‘possible job cuts’. As for the rest of us what is the expectation of AOL moving forward? Will they ever have the position in the marketplace they once held? Will they ever really matter again?