Sunday, August 5, 2012

AOL, Inc.(NYSE:AOL) Approves the $550 M Buyback Plan

On Friday, AOL, Inc.(NYSE:AOL) has made a statement that the company’s board has approved the plan of repurchasing up to the amount of $550 million of its stock. After the announcement, investors have sent its shares to a high record.

AOL also stated that its Dutch auction tender offer to repurchase up to $400 million of its stock has ended. Such a tender offer lets shareholders to come up with the amount of shares they want to tender and within what price range. Based on such data, the company can ascertain the lowest price per share within a range.

Should Investors Buy AOL At Life Time High? Find Trend Analysis

AOL mentioned that 292,435 of its shares were tendered at or less than the final purchase cost of $30 per share. That is equivalent to less than half of a percent of AOL’s overall available shares. AOL is purchasing $8.8 million of its shares based on the $30 price, which is quite less than the maximum value of $4oo million.
A company that has sold more than 800 patents and similar applications to Microsoft for more than $1 billion seems to have plans to return to its proceeds. This can take form of buybacks, tender offers, dividend payments and privately negotiated transactions.

Stock buybacks are indicative of companies having enough capital to withdraw their shares from the market. This can increase the value of remaining shares of the investors and boost results of per-share earnings.

As the chairman and CEO of AOL, Tim Armstrong has said, the companies strong financial and operational performance is yielding results in form of long-term value creation for its shareholders.

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AOL has reported a good response at the second quarter revenue and fifth straight quarter of growth in advertising. This is a sign of the company’s efforts in turning its business around.

Shares of AOL increased $1.13 or 3.59% to $32.63 on Friday and made an all time high of $32.65.

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