AOL Worth $26 Billion? Not Anytime Soon

Time Warner's inability to grow AOL after its value sank during the dot-com bust has left many wondering why the media giant continues to keep it. But Time Warner chief Dick Parsons is adamant that the Internet service provider-cum-Web portal will soon be worth as much as $26 billion.

"It's even conservative," he says. "The reason I always resisted the call to sell AOL ... is because I believe in the business." Good, Dick. To many, that might sound like one of those out-of-touch Go-Go-CEO pronouncements. What's on offer at AOL that sets it apart from say, Yahoo or MSN? Also, although it is changing its business model and ad revenue is improving, recent evidence shows that the Web portal model isn't what it used to be. (Ask Yahoo, whose stock market value has sunk to about as much as Parsons is prognosticating for AOL.)

It's kind of sad to talk about the once-mighty AOL in these terms. After all, AOL acquired Time Warner way back in 2000 for $160 billion, when it was worth nearly $200 billion itself.
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