AOL names former Google executive as CEO

Mar 12, 2009

(AP) -- An executive from Google Inc. is becoming the latest CEO of AOL, raising hopes that he will be able to turn around Time Warner Inc.'s struggling Internet unit.

Tim Armstrong, who had been a senior vice president at and head of the company's North and South American advertising operations, replaces Randy Falco, a veteran TV executive who took the job in November 2006. Falco, along with Ron Grant, AOL's president and , are leaving AOL.

Armstrong, 38, also will take over from Falco as chairman.

This shake-up - one of several the company has experienced lately - could mean a spin-off of AOL is more likely. CEO Jeff Bewkes has said he's open to a merger or sale of AOL, and in a statement Bewkes said Armstrong would help Time Warner "determine the optimal structure for AOL."

"Tim is the right executive to move AOL into the next phase of its evolution," Bewkes said. "At Google, Armstrong helped build one of the most successful media teams in the history of the Internet."

Armstrong worked at Google for 8 1/2 years. As the company's first employee outside of Mountain View, he started its New York office.

The transition is another sign of turmoil in Time Warner's decade-long attempts to salvage its 2001 acquisition by AOL, once known as America Online. The $147 billion AOL-Time Warner deal symbolized the astonishing wealth created by the dot-com boom and quickly became one of the most disastrous marriages in U.S. corporate history.

During the past few years, AOL has been realigning itself around three core businesses - its Platform A advertising unit, MediaGlow publishing unit and People Networks social media unit. These businesses are meant to bring in revenue through online advertising, as a way to offset losses from its fading dial-up Internet access service.

Besides realigning AOL, Time Warner has made moves to separate the dial-up operations from these ad-focused businesses, which would make it easier for Time Warner to sell one or both.

Problems have persisted, though. In early February, Time Warner reported that AOL's fourth-quarter revenue dropped 23 percent to $968 million, hurt by falling subscription revenue and ad sales.

There have been numerous management changes as well. A day before its parent company's quarterly report, AOL named former a Yahoo Inc. executive, Gregory Coleman, to head Platform A. Coleman replaced Lynda Clarizio, who had come on just last March.

Another reminder of the ongoing troubles came the day of Time Warner's report, when Google - which paid $1 billion in 2006 for a 5 percent stake in AOL and is its largest shareholder aside from Time Warner - triggered an escape clause in its contract with AOL. The clause forces Time Warner to spin off Google's holdings through an initial public offering or repurchase the stake at current market value.

This came after Google wrote off $726 million of its investment in the fourth quarter because of AOL's falling value. Google had made the investment in an effort to increase its advertising partnership with AOL and prevent rival Microsoft Corp. from trying to get involved with the company.

Richard Greenfield, an analyst with Pali Research, called the management change "a huge positive all around" for Time Warner investors. With Armstrong at the helm, he thinks it's more likely that Time Warner will eventually separate the AOL unit from its main business.

Kevin Lee, chief executive of search marketing firm Didit, feels the same. If the economy and stock market improve, and Armstrong is able to shape up AOL, Lee thinks it is possible that Time Warner would spin the business off as a public company or sell it.

Regardless, he's certain Armstrong has plenty of work ahead of him.

"If he wanted challenges, he picked a great place for challenges," Lee said.

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

Explore further: Amazon launches 3D printing store

add to favorites email to friend print save as pdf

Related Stories

Tech investors eye AOL-Google talks

Oct 13, 2005

The financial community is keeping a close eye on a reported plan by Google and Comcast to acquire a stake in America Online.

AOL has full dance card

Oct 18, 2005

America Online, whose fortunes, had run from feast to famine, looks to once again have a full dance card with possible acquisition partners reading like a list of the dot-com titans. Possible partners include Yahoo! Inc ...

Microsoft takes lead in AOL bidding

Nov 07, 2005

Microsoft Corp. has taken the lead in talks to purchase a major stake in America Online from Time Warner Inc., according to a news report Monday.

Recommended for you

Amazon launches 3D printing store

11 hours ago

Amazon announced Monday the launch of an online store for 3D printed items to allow consumers to customize and personalize items like earrings, pendants, dolls and other objects.

Samsung delays Tizen smartphone sales launch

16 hours ago

Samsung Electronics said Monday it would postpone the roll-out of its new smartphone based on Tizen, a home-grown operating system aimed at breaking away from Google's Android system.

Chinese portal Sohu reports $45 million loss

19 hours ago

(AP)—Sohu.com Inc., operator of a popular Chinese Internet portal, said Monday it lost $45 million in the latest quarter while revenue rose 18 percent to $400 million.

User comments : 0