Poor AOL. We're in the midst of the Internet's second coming, and the beleaguered Time Warner unit was never invited to the party.
The Economist says the specter of the worst merger in
history has cast a perennial pall over the one-time Web giant, leaving few people at Time Warner with anything nice to say about it at all. In fact, analysts on Wall Street regularly cite AOL as the
reason they don't advise clients to buy Time Warner. Because of this, the paper predicts Dick Parsons will soon have to cut the Web portal lose, as it now looks for a buyer for parts of AOL Europe.
"[Time Warner] is certainly under no illusions about AOL's prospects, nor is it particularly attached to the business." Every year AOL loses subscribers, many of whom hold onto their
accounts simply to keep the e-mail address they've had for years. The company's first quarter revenues dropped 7 percent and its operating profit fell 17 percent, bringing down Time Warner's otherwise
decent results. What can AOL do to spice things up? One analyst said the company needs to bleed subscribers and hope that free content can attract new traffic and advertisers--a risky strategy, since
so much of its existing traffic comes from subscribers.
Read the whole story at The Economist »
