Monday, April 15, 2002

It's Come To This

Wall Street Journal columnist Kara Swisher today says publicly what everyone has been saying privately: Maybe AOL should be spun off. It's a tough, smart column and after quickly summarizing a number of pressing problems at the company, she cuts to the chase:

"If all this doesn't work, AOL Time Warner Chief Executive Richard Parsons would not be wrong to consider a more drastic move, including spinning off the AOL unit.

Sources at the top of the company call this option ridiculous. But is it? Right now, calculating the value of the corporation's assets at its current stock price, the AOL online service is valued at exactly nothing -- so it's not as if this move would kill the company's value.

The plus: It would allow America Online to become nimble again and rise and fall on its own, able to make alliances it needs outside the Time Warner family. While Mr. Pittman and others touted the magical abilities of the online unit to sell other Time Warner goods and services, it hasn't turned out quite that well yet, and such deals could still be done without the iron link on friendly terms. What's more, it's not as if any of the other slow-growth businesses of the company (magazines, for example) are helping AOL that much."

You can read the whole piece by clicking here. But you need to be a subscriber to