14 DAY TRIAL // AOL has seen better days and, as its efforts to turn around don’t seem to be paying off, it has one less headache to worry about. The company has announced that it has sold ICQ, one of its two IM services, to Russian Internet giant Digital Sky Technologies (DST). ICQ was bought for $187.5 million, a decent sum considering it hasn’t been doing so great in most markets. At the same time, AOL is reporting some rather disappointing financial results.
“As AOL continues its turnaround effort, we’re fortunate to find a great home for ICQ with DST,” Tim Armstrong, chairman and chief executive officer of AOL, said. “DST is a leading innovator in the Internet investment space and has a significant presence in the markets where ICQ is strong.”
“The acquisition of ICQ is a strategic enhancement of our business in Russia and Eastern Europe. ICQ’s long-standing brand name and its sizeable loyal customer base together represent a very attractive opportunity to further strengthen our position in the region,” Yuri Milner, chief executive officer of DST, explained.
ICQ has been an odd match for AOL from the start and, while the IM service has managed to get a solid following in some regions, it failed to do so in the US. AOL paid $407 million in 1998 for Mirabilis, the Israeli company behind ICQ, but has sold the service now for less than half that sum.
DST, which owns a couple of the biggest web proprieties in Russia and has invested in both Facebook and Zynga, was probably the best home for ICQ. The IM service is particularly popular in Russia, where it’s the number-one IM, but also in other countries, like Germany.
AOL has posted financial results for the first quarter and they don’t look good. Revenue dropped 23 percent year-over-year to $679 million. The worst part is that its ad sales have dropped 19 percent compared with the same period last year, this while everyone else in the market is reporting a comeback.