Time Warner AOL split

Posted on February 11, 2008
Filed Under business |

The new CEO of Time Warner Inc Jeff Bewkes has decided to divide AOL’s online access and advertising business and probably spinning off the rest of the company’s other division (the cable division). The move main purpose is to separate AOL’s online advertising business from there dial-up business. This could make room for a switch to the more practical and readily available high-speed internet service via cable or phone. This move could also be in response to the declining Time Warner shares which have declined 29% in the past year. Given Microsoft’s move, an unsolicited bid for Yahoo the big internet companies are heated up with the activity, in the case of this move by Time Warner shares rose last week.

Time Warner is not only looking to separate divisions but also to put AOL up for sale. At the time when the internet bubble was in full swing Time Warner agreed to be purchased by AOL. Since then, the bursting of the dot.com bubble, accounting improprieties, write-downs and settlements with shareholders and regulators have been commonplace. Bewkes said in no uncertain terms that Time Warner Cable specifically has different needs than that of AOL and will be better off on its own.

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