The Rebound Begins

Richard Parsons yesterday became the chief executive officer of AOL Time Warner, replacing Gerald Levin. The timing could not be better for Mr. Parsons. AOL's stock price has hit rock bottom. The worst of the advertising recession has passed. Everything that went wrong is being blamed on someone else. And Jessica Reif Cohen of Merrill Lynch, the best AOL analyst around, just upgraded the stock.

The story was played as AOL sings the blues. But the truth is Parsons is whistling a happy tune. The break-up value of just the Time Warner assets now exceeds the market capitalization of the merged entity. Barring scandal, a year from now we will be reading the "Parsons-led AOL Turnaround" story. Since he's a good guy, more power to him.