One of AOL’s largest shareholders, Starboard Value LP has a massive presentation on everything Tim Armstrong and co. are doing wrong.If the name Starboard sounds familiar, it’s because it led the charge to get AOL to sell its patent portfolio for $1 billion. That was pretty smart!
Maybe Tim Armstrong wants to listen to more advice from this group?
We have Starboard’s presentation embedded here.
It’s an entertaining read from start to finish, but if you just want the key takeaways, here they are:
- AOL needs to kill Patch. It just doesn’t work as a business, and advertisers hate it.
- AOL needs to make its display business profitable by cutting the fat, and investing properly.
- AOL has made the once profitable Huffington Post unprofitable. This is a metaphor for the company at large.
- AOL needs to analyse each business division on its own and make them profitable.
If you read the whole presentation it’s a pretty clear headed argument that AOL could be running a much better business. (This presentation from Starboard is based on third party analysis by L.E.K. consulting.)
But it's not doing a good job running these sites, thus organic display revenue is down 13% since 2009
Look at HuffPo. Before AOL bought it, it was a profitable, scrappy startup. Now it's fat and unprofitable.
Therefore, any decisions about investing in display need to be seen outside of the search business. It needs to be viewed independently.
AOL needs to look at each business line on its own and decide if it's strong enough to stand on its own two feet.
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