Google’s 5% Stake In AOL Isn’t Worth $1B Anymore

No surprise that Google has assessed it’s $1B acquisition of 5% of AOL and decided that it looks like a bad deal, now:

[from Wired News - AP News by Michael Liedtke]

[…]

Google acknowledged for the first time that it might have to recognize a loss on its 5 percent stake in AOL, whose struggles have made it a financial albatross for its owner, Time Warner Inc.

[…]

Google bought its stake in AOL largely to prevent one of its largest advertising partners - AOL - from defecting to Microsoft Corp. The bidding war helped drive up AOL’s implied market value to $20 billion, based on Google’s investment.

Some analysts have suggested AOL may be worth less than $10 billion now. Google didn’t estimate in its SEC filing what it believes its stake to be currently worth.

[…]

As part of its investment, Google has the right to demand that Time Warner spin off AOL in an initial public offering of stock or buy back its stake. But Google so far hasn’t indicated any interest in going down that path.

I continue to be astonished that Google — being directed by relatively smart people — would invest in AOL, for whatever reason.