Wednesday, August 29, 2012

AOL, Inc. (NYSE:AOL) Stabilizes After The Recent rally

Shares in AOL, Inc.(NYSE:AOL) continue to rise even as the company itself is floundering with its new ventures failing to deliver and revenues from its paying subscribers in serious danger of dwindling to zero.

On Wednesday, its shares were trading up 0.5 percent at $33.79 a share. In the last on year the shares have risen 136 percent, an astounding performance by a company that has very little to offer.

The current rally comes after the company announced $1 billion in pay-outs to shareholders via a share buyback worth $600 million and a one-time dividend.

The money for this bonanza has been raised via the sale of a bunch of patents to Microsoft in April. The dividend of $5.15 per share is payable on Dec. 14, a possible buoy on the stock.

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“Despite everything we hear about AOL,” Ron Josey, an analyst with ThinkEquity told Bloomberg.

"They are still one of the most trafficked properties on the Web. They still generate a lot of users, they still generate a lot of content for these users to consume, and they’re still generating buzz around newer properties.”

The company manages to still get Wall Street interested in it, and this ability has been attributed directly to Chief Executive Tim Armstrong's skills.

In the second quarter of 2012, AOL sites drew 112 million unique visitors, down from 113 million during the same period in 2011. Its new ventures such as Patch local news network and Devil ad format haven’t delivered according to expectations and certainly do not justify the kind of investments that have been made in them.

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