AOL CEO Pitches Investors for a Deal with Yahoo

October 13 00:00 2011

New York, October 13 (RainbowNewsLine.com) – Tim Armstrong, AOL CEO, has been meeting with his shareholders for entering into a deal with Yahoo Inc (NYSE: YHOO) for achieving up to $1.5 billion in cost savings, presenting it as a viable alternative to going it alone as an internet media company.

A top 20 AOL shareholder who attended one of the meetings said, “The focus in the meeting has gone from a year ago of being around the fundamentals to now being how could you carve this up, what are separate assets worth, are there ways to sell off the business to extract value from them.”

Armstrong is pushing the idea that a combination with Yahoo would appease ad agencies looking for more efficient buys with a bigger audience. He wants to turn the company into one of the top media destinations dependent on ad revenue, after a disastrous 10 year merger with Time Warner Inc.
However, so far it seems difficult because AOL will have to compete for advertising dollars against Facebook, Google and Yahoo itself. AOL reported a surprise quarterly loss in August and blamed weaker-than-expected advertising growth. Its shares plunged 31 percent.

A deal with Yahoo would enable Armstrong to leave AOL gracefully. A source said that “As far as Armstrong’s desire for an exit, he doesn’t want to be doing what he is doing 18 months from now. He wants to be out. But he would definitely put his hat in the ring to run a combined Yahoo/AOL.”

  Categories: