Wait, What Is AOL Going To Do With The Cash From Its Patent Sale?

Tim Armstrong thinks

Photo: MattHurst

AOL just scored a major victory.It will be selling its patent portfolio for $1.1 billion to Microsoft. Considering outsiders were valuing it at $290 million a week ago, this is quite the coup.

AOL gets a nice check from Microsoft with out legal hassles or reputational damages. Yahoo is public enemy number one in the tech world for suing Facebook over patents. A suit it could very easily lose.

However, we’re scratching our heads a little bit about AOL’s plans for the $1.1 billion.

In the release, AOL says, “AOL management and its Board of Directors intend to return a significant portion of the sale proceeds to shareholders and will determine the most efficient and effective method to do so prior to the closing of the transaction.”

We guess it’s better than plowing the money into Patch, but still, there’s nothing better AOL can think of doing with its money? AOL can’t come up with one area of the business to invest in? Acquisitions to make?

Even holding onto the cash for a rainy day makes more sense. It’s not like AOL’s core business is humming along generating cash at a fantastic clip. Its money-maker, the dial-up business, is dying and won’t last forever.

If it wants to live, it’s going to need that cash at some point.

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