AOL goes it alone, at last

Posted by Nigel Constantine

AOL completes its spinoff from Time Warner today and the question is whether or not it will survive.
It is an odd question given that the last time it was a separate company, in 2001, it was worth more than $100 billion.

CNNMoney and Fortune parent Time Warner bought the outfit for  $111 billion in one of the crazier buy outs in history.

Now the outfit is worth just a little more than $3 billion.  It is still profitable. Over the first nine months of 2009, AOL brought in just $765 million of profit on $2.4 billion of revenue, but the profits are in free fall, down 33 per cent from the first nine months of the previous year.

AOL plans to chuck out a third of its 2,300 staff into the cold and the snow before Christmas.

Some analysts think that the outfit could find its niche although none are certain what it is. AOL owns lots of good content sites including some that most users likely didn't even know belonged to the company. Engadget.com and social networking site Bebo.com are both AOL sites with loyal fan bases.

AOL also owns Advertising.com, a display advertising network that the Internet services company bought in 2004. AOL now has the largest advertising reach in the country, putting it just ahead of Yahoo and Google.

However it does need to change. Its dial-up customers, which were once the main source of income, number six million and that's falling. AOL Instant Messenger (AIM) still has a strong user base but is losing ground to Gmail and Facebook.

What the new spun off AOL will have to work out what it wants to do with its life, settle down and grow up a bit.