AOL Shares Falter on First Day as Standalone Company

AOL Inc. (AOL) shares faltered in the first hours of the company’s life as a standalone entity.

AOL, which has re-branded itself as Aol., spun off from Time Warner Inc. on Wednesday; now it’s trading on the New York Stock Exchange and, well, isn’t doing so great. Shares were down 2.37 percent to $23.11 by 11:46 a.m. Eastern. Several analysts were expecting share prices of about $29.

The company used to be an Internet kingpin. Launched in 1995, AOL fomented the Web obsession, complete with chat rooms and links to content. But its fortunes declined after the 2001 merger with Time Warner, a deal now considered among the most disastrous in corporate history.

And as dial-up use plummets, so has AOL. Now, it’s working to turn itself around, billing itself as a 21st Century content site. CEO Tim Armstrong has a lot on his plate if he’s to achieve that goal. Expect to see layoff announcements soon. Armstrong asked for 2,500 voluntary layoffs a few weeks ago and said if enough workers didn’t take the offers, involuntary cuts would follow. The deadline for voluntary buyouts is today.

Meantime, AOL has created new logos as it embarks on its new journey. And that journey promises to be long and hard. One Morningstar analyst said on Thursday that all of AOL’s core segments will continue to decline and the “tarnished brand” will keep the company from reinventing itself. AOL faces the dual problem of fewer dial-up subscribers and falling ad revenue. It’s not a go-to site for search; Google already powers AOL’s search engine in a deal set to expire next year and most Internet users already go to the Google site to get their results – hence AOL’s strategy for becoming a premier content provider.


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