Yahoo! Inc (YHOO) Financial News - AOL Gets Last, Best Hope in Private Equity
Yahoo! Inc (YHOO)
AOL Gets Last, Best Hope in Private Equity
2011-08-18 06:38:36
Quote: Mountain ViewCalifornia, and Sunnyvale,
California-based Yahoo! Inc. were already courting marketers
online.
AOL’s access business had 3.4 million subscribers as of
June 30, down 23 percent from a year earlier, according to
regulatory filings. The business may wind down by 2015,
estimates Evercore’s Sena.
Huffington Post
Tim Armstrong, 40, is banking on
display ad sales on the Huffington Post, TechCrunch, MapQuest
and Patch’s local community news websites to help the
advertising business reach profitability before the earnings
from the access business vanish. Armstrong acquired the
Huffington Post in March for $300 million, a price tag that
represents almost a quarter of AOL’s current market value, data
compiled by Bloomberg show.
“They hope that the display advertising and ad network
businesses will basically compensate for that loss and become
profitable,†said B. Riley’s Sinha. “The Huffington Post is
essentially the cornerstone of their branded display strategy.â€
Armstrong, who previously ran Google’s ad sales in the
Americas, was hired as AOL’s CEO in March 2009. Since the
separation was completed in December of that year, AOL has
fallen 47 percent.
Keith Wirtz,
Cincinnati-based chief investment officer at Fifth Third Asset
Management, which oversees $16.7 billion.
‘Cash Cow’
“Private equity firms may not be stepping in because they
don’t see an end game,†Wirtz said in a phone interview. “This
is a cash cow that’s melting like an ice cube.â€
AOL’s share of U.S. display ad sales is projected to
decline to 4.2 percent this year, down from 6.4 percent in 2009,
according to New York-based research firm EMarketer Inc.
Facebook Inc. will command almost 18 percent of the market in
2011, while Yahoo is expected to draw 13 percent and Google 9.3
percent, according to EMarketer.
Private equity firms will be the most compelled to acquire
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