14 DAY TRIAL // Time Warner's AOL was holding Yahoo!'s hand when it came to going down the profit slope, and joined the Sunnyvale-based company at about the same time it began its decline. Ever since it switched its strategy to advertising, it lost profit on a quarterly basis and the parent company isn't very thrilled about it.
The hope Warner had was that either Yahoo! or Microsoft, among others, would make a bid for AOL and by that create a merger that would save it. No such luck, Friday's news leaving two less potential buyers for the advertising platform that the old dial-up provider has invested in.
It's not all bad, though, because Yahoo! interests the Redmond-based company mostly for its ad business, it could mean that if the takeover were to go through, that would raise an eventual bid for Time Warner's company. The prospect mentioned above would however be hindered by Google, who bought 5 percent of AOL late in 2005, for one billion dollars. At the moment, everything is on hold, pending on Yahoo!'s answer, as no spokesperson from Time Warner or from Google declined to comment.
According to the Associated Press, "revenues fell 38 percent in the third quarter, when a 56 percent drop in subscription revenue more than offset a 13 percent gain in advertising," while operating income fell 24 percent to about $295 million. If you're a stock holder for AOL, keep your fingers crossed because Wednesday the figures for the fourth financial quarter will be announced by the parent company. It's looking gloomy, as Time Warner earlier announced that a very important online advertising customer has been lost in the beginning of January.
I'm betting few thought about the implications Microsoft's bid might have for the entire industry, as most analysts focused on Google, being challenged by the dynamic duo-to-be.