AOL finally regains independence from Time Warner

December 10, 2009
AOL Chairman and CEO Tim Armstrong, center, applauds during opening bell ceremonies of the New York Stock Exchange Thursday, Dec. 10, 2009. Shares of AOL declined in early trading Thursday as the Internet company made its official split from media giant Time Warner. (AP Photo/Richard Drew)

(AP) -- AOL resumed life as an independent Internet company Thursday as it completed its spinoff from Time Warner Inc. and closed the book on one of the most disastrous business combinations in history.

AOL shares fell 47 cents, or 2 percent, to $23.20 in afternoon trading.

Today's AOL is much different from the company once known as America Online, which got big in the 1990s by selling dial-up Internet access and then used $147 billion of its inflated stock to buy Time Warner. AOL, which is now worth about $2 billion, is trying to get most of its money from running advertisements on its portfolio of Web sites.

Those sites include the AOL.com home pages, Mapquest and tech blog Engadget. AOL isn't keeping the entertainment site TMZ, which is staying in Time Warner.

When AOL bought Time Warner in 2001, the companies bet that Time Warner's TV and magazine content would complement AOL's Internet business. Instead, broadband Internet connections began to kill off AOL's main source of revenue and drag down the whole company.

The company was once known as AOL Time Warner but dropped AOL from the name in 2003. That was a sign of what was to come: Time Warner announced AOL's spinoff last May after years of trying to integrate the two companies.

In a note to clients, BMO Capital Markets analyst Jeffrey Logsdon called the failed deal "a nine-year adventure akin to a marathon through the mud."

The new AOL has no debt. The company is profitable, though its operating income dropped 50 percent to $134 million in the third quarter from the same period a year earlier. Third-quarter revenue dropped 23 percent from last year to $777 million.

In the past year, AOL hired Tim Armstrong, 38, a former Google advertising executive, as CEO. Armstrong plans to cut up to 2,500 jobs, or more than a third of AOL's employees, on top of thousands of other cuts in recent years. That will leave the company at less than a quarter the size it was at its peak in 2004.

The company plans to fill many of its Web sites with inexpensive material produced by freelancers paid by the post. This week it said it had hired New York Times reporter Saul Hansell to oversee part of that content-generation effort.

©2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Explore further: AOL names yet another head of online ad business

Related Stories

AOL names yet another head of online ad business

May 1, 2009

(AP) -- AOL, the struggling Internet unit that Time Warner Inc. is likely to spin off, said Thursday that it will put a new executive in charge of its online advertising business - making him the fourth person to hold that ...

AOL tries to recapture that startup feeling

July 20, 2009

(AP) -- It might seem an odd move for a company that relies on money from advertising. Yet AOL is reducing the number of ads it shows on its home page and some other Web sites it runs.

AOL offers buyouts to over a third of work force

November 19, 2009

(AP) -- The struggling Internet company AOL plans to shed up to 2,500 jobs - more than a third of its work force - as it prepares to separate from Time Warner and finally sever their ill-fated marriage.

You've Got Freedom: AOL ends ties with Time Warner

December 6, 2009

(AP) -- AOL is shaking loose from Time Warner Inc. and heading into the next decade the way it began this one, as an independent company. Unlike in the 1990s, though, when AOL got rich selling dial-up Internet access, it ...

AOL going public after Time Warner divorce

December 9, 2009

AOL finalized its divorce from Time Warner on Wednesday, ending one of the most disastrous marriages in corporate history and leaving the Internet pioneer facing an uncertain future.

Recommended for you

Power grid forecasting tool reduces costly errors

July 30, 2015

Accurately forecasting future electricity needs is tricky, with sudden weather changes and other variables impacting projections minute by minute. Errors can have grave repercussions, from blackouts to high market costs. ...

Microsoft describes hard-to-mimic authentication gesture

August 1, 2015

Photos. Messages. Bank account codes. And so much more—sit on a person's mobile device, and the question is, how to secure them without having to depend on lengthy password codes of letters and numbers. Vendors promoting ...

Netherlands bank customers can get vocal on payments

August 1, 2015

Are some people fed up with remembering and using passwords and PINs to make it though the day? Those who have had enough would prefer to do without them. For mobile tasks that involve banking, though, it is obvious that ...

1 comment

Adjust slider to filter visible comments by rank

Display comments: newest first

RayCherry
not rated yet Dec 10, 2009
Wonder if ICQ will break free again. Those were the days. ;-)

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.