AOL: Take the Money and Run

After watching AOL (AOL) shares zoom higher after the company announced the sale of more than 800 patents to Microsoft (MSFT) in a transaction valued at $1.06 billion, I am inclined to take advantage of the gap up in AOL shares and exit. Yes, AOL is getting a significant amount of cash, but does this change the company's business model strategy, which has been responsible for market-share losses and contracting revenue? 

According to data from comScore, AOL has less than 2% percent market share in search or data from Amazon's Alexa service, which measures web traffic statistics. The Alexa data show that AOL has been declining over the last several quarters in terms of traffic rank and reach, and it appears that AOL management's efforts to turn the business around have been less than effective. AOL's loss of reach is well known, given consensus expectations that call for a contraction in revenue this year to $2.1 billion from $2.2 billion last year. ...293 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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