In a research note, UBS analyst Michael Morris warns that Time Warner's acquisition of Bebo won't necessarily fix AOL, which paid $850 million for the social network last Thursday. Morris pointed
to the challenging climate for social networks, which face mounting competition, slowing growth, user defection, less time spent per user and an uncertain (and thus far, underwhelming) advertising
strategy. He added that because of AOL's corporate management structure, Bebo could find it hard to innovate and acquire new talent.
In the note, Morris, who's actually bullish on Time
Warner's stock, urges the media giant to get rid of AOL altogether. He says that instead of focusing on fixing AOL, the media giant should invest in its other properties like Warner Bros. Studios and
"Unrealistic expectations have been a challenge for AOL in the past as management has evaluated opportunity," Morris writes. "Time Warner continues to invest in a business that is not a core competency and is not being rewarded by the market."