In the press release CEO Tim Armstrong says, “We believe this stock repurchase makes sense for both our company and our shareholders.”
On a sum-of-the-parts valuation, AOL does look undervalued right now, so if there were a time to buy back stock, now would be it. (The buy back allows AOL to buy some stock over the next 12 months.)
However, you’d think there would be better opportunities out there for AOL to spend $250 million. Either an acquisition, or holding onto the cash to maintain flexibility.
In the release, CFO Artie Minson answers those critiques by saying, “This announcement highlights our strong balance sheet and solid cash flow generation … We believe this is a unique opportunity to invest in our company.”