AOL Patent Sale Goes Through; Announces $600 Million Stock Buyback, $5.15 Dividend

AOL has been in the news lately only for two reasons. One, its lagging business and underperforming stock, and two, its recent patent sale to Microsoft, and eventually Facebook, which helped the latter stave off Yahoo’s patent assault on it.

AOL sold off most of its patents to Microsoft for $1.1 billion. Today, the sale has been completed, and AOL, true to its word, has announced that it will be giving the cash back to its shareholders.

It has announced a $600 million repurchase of AOL stock, and a one-time cash dividend of $5.15 per share, which adds up to nearly $480 million.

By returning cash to shareholders, AOL has bought itself some more time to get back in the game. However, that would be much more likely if it had reinvested all the cash in the business itself.

Tim Armstrong, AOL’s CEO, sent out a memo to his staff:

“Our first strategic goal is to build world-class brands that are meaningful businesses and we are going to continue to pursue that with alacrity. The second strategic goal has been to build a substantial financial foundation for our investors and more importantly, our investors’ investors. While we continue to successfully navigate AOL’s turn-around, we are also trying to build immediate value for all of our shareholders.

This morning, we announced the final steps in returning approximately all of the $1.1 billion proceeds from the patent deal with Microsoft to our shareholders by year-end. Specifically, we have begun a transaction with Barclays that is allowing us to pursue the repurchase of $600 million in AOL stock. We also announced a special one time cash dividend of $5.15 per share. The combination of the repurchase program and the special dividend is delivering what we had promised our investors and also allows us to give all shareholders the ability to own a bigger stake in AOL.”

via Techcrunch

AOL Reports Q2 2012 Earnings; Profit Nearly $1 Billion, Boosted by Patent Sale

AOL reported its earnings for Q2 2012, with a continued decline in its quarterly revenues which are now down to $531 million, a 2% decline year-over-year. While it should have posted just a marginal profit, it posted a net profit of around $970 million, which was mostly because of the sale of its patents to Microsoft for around a billion dollars. It reported a gain on disposal of assets (intellectual property) of $945.8 million, which accounted for almost all of its net profit.

It ended Q2 2012 with around $1.468 billion in cash and cash equivalents, over a billion dollars more than it ended the last quarter with.

Coming to the revenue split, it reported a healthy 5% increase in its advertising revenues, while its subscription and other revenues continued to decline.

Its domestic AOL access subscribers continued to decline to around 3 million, while its unique visitors on AOL properties increased to around 112 million and unique visitors to AOL’s ad network increased to 186 million.

Advertising will eventually account for almost all of its revenues. In the last quarter, it made around $140 million in display ad revenue, and $87 million in search ad revenue. Its third party ad network revenue added up to $111 million.

Tim Armstrong, Chairman and CEO of AOL, said:

“Today’s results represent a significant milestone for AOL as we returned to Adjusted OIBDA growth for the first time in four years. The strong results and consumer performance we announced today are clear signs our strategic and operating efforts are translating into significant financial progress.”

via AOL – SEC

Facebook Buys 650 AOL Patents from Microsoft for $550 Million

If you have not been living under a rock, you already know about Yahoo’s patent lawsuit against Facebook, and Facebook’s counter-lawsuit. You must also be aware that AOL recently sold most of its patent portfolio to Microsoft — nearly 800 patents for $1.05 billion.

While Facebook itself bought itself some patent protection from IBM, we speculated that they may not be enough to properly defend itself, and that Facebook may need to buy some more. We also suggested that Facebook should buy AOL’s patent portfolio.

Apparently, Facebook has gone ahead and done exactly that. It has acquired around 650 of the AOL patents from Microsoft. Microsoft will now own around 275 AOL patents and applications, as well as a license to the ones it sold off to Facebook.

“Today’s agreement with Microsoft represents an important acquisition for Facebook. This is another significant step in our ongoing process of building an intellectual property portfolio to protect Facebook’s interests over the long term.” said Ted Ullyot, general counsel, Facebook.

The deal actually makes sense, as Microsoft owns a significant stake in Facebook, and has backed it since years. Facebook gets the patents it needs, and Microsoft gets the license to them, while retaining the patents it needed most.

“Today’s agreement with Facebook enables us to recoup over half of our costs while achieving our goals from the AOL auction. As we said earlier this month, we had submitted the winning AOL bid in order to obtain a durable license to the full AOL portfolio and ownership of certain patents that complement our existing portfolio,” said Brad Smith, executive vice president and general counsel, Microsoft.

Why Facebook Should Buy AOL’s Patent Portfolio

Facebook is in a very vulnerable position right now, from a litigation point of view, as it is now in its SEC mandated quiet period right before its much awaited $100 billion IPO, and also because it hardly has many patents to defend itself against patent trolls and aging internet giants like Yahoo looking to make a quick buck by suing the hell out of more successful, but younger players who don’t have a huge patent portfolio to defend themselves.

It recently acquired 750 patents from IBM, primarily to defend itself against such litigation, but that may not be enough, and it may need to buy some more.

On the other hand, you have AOL, a dying relic of the dot-com bubble. Its market cap has shrunk to a fraction of its market cap in its glory days, and the value of its business may possibly be less than its patent portfolio.

It has 700-800 really important patents according to its CEO, with half of them incredibly important for internet users. This could be the ideal patent portfolio for Facebook, as it has a lot of patents related to fundamental internet technologies, IM, email, webpage rendering, search engine technology etc.

While AOL seems to think that the value of its patents is more than $1 billion, a patent advisory firm has estimated its value at only around $290 million. This could make it a very easy purchase for Facebook, which has around $4 billion in cash and marketable securities, and is set to raise another $5 billion in its IPO.

Yahoo Lawsuit Paints A Target on Facebook’s Back; Attracts More Lawsuits

It seems that Yahoo’s lawsuit against Facebook has opened the floodgates for litigation against the latter. Facebook has been sued by yet another company in the last week, and some more, including AOL, may be planning to sue it in the coming days, according to a report by Techcrunch.

Though Yahoo’s patent infringement claims against Facebook were criticized by almost everyone in the industry, there is a good chance that Yahoo will make some money off it, as it targets Facebook right before its IPO.

Apparently, some other firms want to cash in on Facebook’s IPO too, albeit in a different way. Mitel, a Canadian IT company, has also sued Facebook for infringement of two patents related to “automatic web page generator” and “pro-active features for telephony”. It is asking for damages as well as a royalty from Facebook.

Even AOL seems to be preparing to get in the game. It filed a revised application for a patent last week, which is related to the monitoring and automatic updates related to friends of the user on social network. The revised application seems to be aimed at focusing the patent on the features that Facebook is currently offering.

This may not be the end of it. Facebook, which is no stranger to controversy, may see a lot of such last-ditch attempts at making money by obsolete internet giants like Yahoo and AOL.

Google, Microsoft, Yahoo and AOL Team Up to Combat Phishing

In spite of spirited efforts from email providers, browser developers, and security firms, phishing continues to be a major nuisance. There are already repositories like Phishtank that rely on crowdsourcing to identify phishing campaigns. However, crowdsourcing is not nearly nimble enough to tackle phishing scams that often require just a few hours to cause the intended damage.

Now, a new Cisco spinoff called Agari is trying to tackle the problem by combining multiple sophisticated approaches including authentication of the sender, message analysis, and end-to-end email channel visibility. Google, Microsoft, Yahoo, and AOL, who are amongst the biggest email providers, have joined hands to provide metadata about emails passing through their networks to Agari, which uses its cloud infrastructure to analyze more than 1.5 billion messages every day. It doesn’t receive the actual messages, but might receive suspicious links contained in the message along with miscellaneous metadata. Agari, which is launching today, has Facebook and some of the largest financial institutions, social networks, and ecommerce companies as its customers. Besides the aforementioned four email giants, file sharing website YouSendIt, social network LinkedIn, and Cisco are also part of its trust fabric network.

Agari

“Facebook can go into the Agari console and see charts and graphs of all the activity going on in their e-mail channel (on their domains and third-party solutions) and see when an attack is going on in a bar chart of spam hitting Yahoo,” for instance, Daniel Raskin, vice president of marketing for Agari, explained to CNET. “They receive a real-time alert and they can construct a policy to push out to carriers (that says) when you see this thing happening don’t deliver it, reject it.”

Agari, which had been operating in stealth mode for the past couple of years, protects 50 percent of U.S. consumer e-mail traffic and more than one billion individual mailboxes. During its stealth phase, it rejected more than one billion messages across its email partners. Agari believes that by having end-to-end visibility over most messages it can rapidly react and stop phishing campaigns in their tracks.

AOL To Cut 70% Workforce In India

Even though the Global economy is recovering from recession and major industries are getting back to gear, AOL seems to play it in a different way. Recently AOL acquired the news opinion website Huffingtonpost.com and it is after this development that the company plans to lay off around 70 per cent of AOL India’s total employee strength which currently stands at about 1000 employees.

The remaining employees would be the ones from the Technology team of AOL in India and they will be merged with a service provider like Infosys, MindTree, TCS or ITC Infotech and from that point they will work with AOL on a contract-outsourced model.   Tim Armstrong, the CEO of AOL has said that these layoffs would be done in a proper manner as he knew how does it feel to be laid off because his father had once been laid off.

Source

AOL Acquires TechCrunch: It’s Official

AOL Buys TechcrunchAOL is one of the oldest names in the web business. However, it has seen a huge drop in traffic in the past few years.

Yesterday, GigaOM first reported that AOL was in the process of buying out TechCrunch, a leading technology blog focused on startups which was started by Michael Arrington. It was hard to believe, but coming from Om Malik definitely gave it some credence.

Today, it has been officially confirmed by Tim Armstrong. He took to the stage with Michael Arrington at TC Disrupt and announced the acquisition. TechCrunch will now be a part of the AOL Technology Network.

AOL previously acquired Weblogs Inc., the company behind Engadget, from Jason Calacanis in 2005.

According to Business Insider, the deal size is reported to be around $25 million as an initial payment and performance based earn-outs. Plausibly, this is to ensure that TechCrunch retains its brand value even if Michael Arrington is not leading the charge.

Here is the full PR statement:

AOL TO ACQUIRE TECHCRUNCH NETWORK OF SITES

Leading Authority on Tech News Will Expand AOL’s Growing Offering of World-Class, Audience-Relevant Content

San Francisco, CA, September 28, 2010 AOL Inc. [NYSE: AOL] today announced that it has agreed to acquire TechCrunch, Inc., the company that owns and operates TechCrunch and its network of websites dedicated to technology news, information and analysis. TechCrunch and its associated properties and conferences will join the AOL Technology Network while retaining their editorial independence, further bolstering AOL’s position as one of the world’s leading providers of high-quality, tech-oriented content. The announcement will be made on stage at TechCrunch Disrupt in San Francisco, CA.

Founded by Michael Arrington, TechCrunch operates a global network of dedicated properties from Europe to Japan, as well as vertically-oriented websites, including MobileCrunch, CrunchGear, TechCrunchIT, GreenTech, TechCrunchTV and CrunchBase. The TechMeme Leaderboard ranks TechCrunch as the No. 1 source of breaking tech news online, followed by AOL’s Engadget.*

Michael and his colleagues have made the TechCrunch network a byword for breaking tech news and insight into the innovative world of start-ups, and their reputation for top-class journalism precisely matches AOL’s commitment to delivering the expert content critical to this audience,said Tim Armstrong, Chairman and Chief Executive Officer of AOL. TechCrunch and its team will be an outstanding addition to the high-quality content on the AOL Technology Network, which is now a must-buy for advertisers seeking to associate their brands with leading technology content and its audience.

Heather Harde, Chief Executive Officer of TechCrunch, said: TechCrunch and AOL share a motivating passion for quality technology news and information, and we’re delighted about becoming part of the AOL family. This represents a compelling opportunity to extend the TechCrunch brand while complementing the great work of sites like Engadget and Switched. Our contributors, and our audiences, can look to the future with excitement about what we can build when we have the significant resources of AOL behind us.

Michael Arrington, Founder and Co-Editor of TechCrunch, said: Tim Armstrong and his team have an exciting vision for the future of AOL as a global leader in creating and delivering world-class content to consumers, be it through original content creation, partnerships or acquisitions. I look forward to working with everyone at AOL as we build on our reputation for independent tech journalism and continue to set the agenda for insight, reviews and collaborative discussion about the future of the technology industry.

TechCrunch also hosts industry-leading conferences and events, including The Disrupt series, The Crunchies Awards and various meet-ups worldwide. These conferences bring together industry innovators, entrepreneurs and financing sources to exchange ideas, forge new relationships and discuss the current and future industry trends.

Engagement with thought leaders is as important to AOL as our engagement with our contributors, audiences, publishers and advertisers, and TechCrunch’s conferences and websites will give us a promising, additional springboard to join and amplify these conversations. We’re committed to quality in everything we do at AOL, and look forward to working with Heather, Michael and the TechCrunch team to extend the brand,said David Eun, President of AOL Media and Studios.

The AOL Technology Network consists of AOL’s tech-oriented properties including Engadget, the Web magazine about everything new in gadgets and consumer electronics; Switched, which covers the intersection of the digital world with entertainment, sports, art, fashion and lifestyle; TUAW, the unofficial Apple weblog; and DownloadSquad, the weblog about downloadable software and other computer subjects. The AOL Technology Network ranks in the top five for tech news according to comScore Media Metrix, August 2010 data, and leads the top five in average time spent and average visits per user.

This acquisition will further AOL’s strategy to become the global leader in sourcing, creating, producing and delivering high-quality, trusted, original content to consumers. TechCrunch will remain headquartered in San Francisco, CA, as a wholly owned AOL unit. Deal terms were not disclosed.

Source: TechCrunch

AOL Acquires TechCrunch

It is finally official, Tim Armstrong, CEO of AOL, announced today at TechCrunch Disrupt that AOL has finally acquired TechCrunch and all their properties in a successful deal today.

AOL Inc. [NYSE: AOL] today announced that it has agreed to acquire TechCrunch, Inc., the company that owns and operates TechCrunch and its network of websites dedicated to technology news, information and analysis. TechCrunch and its associated properties and conferences will join the AOL Technology Network while retaining their editorial independence, further bolstering AOL’s position as one of the world’s leading providers of high-quality, tech-oriented content. The announcement will be made on stage at TechCrunch Disrupt in San Francisco, CA.

The deal gives AOL a big lead in the tech reporting industry after it had also bought Weblogs Inc. through which they got hold of Engadget. Today with the acquisition of TechCrunch, AOL has their hands on two of the biggest tech reporting sites in the world.

TechCrunch which was started out 5 years ago by a lawyer Michael Arrington has quickly grown to become a huge establishment with several web properties and events under their umbrella. TechCrunch network contains MobileCrunch, CrunchGear, TechCrunchIT, GreenTech, TechCrunchTV and CrunchBase.

Michael Arrington, Founder and Co-Editor of TechCrunch, said: Tim Armstrong and his team have an exciting vision for the future of AOL as a global leader in creating and delivering world-class content to consumers, be it through original content creation, partnerships or acquisitions. I look forward to working with everyone at AOL as we build on our reputation for independent tech journalism and continue to set the agenda for insight, reviews and collaborative discussion about the future of the technology industry.

So does this mean that AOL has now bigger control over the tech news industry with both Engadget and TechCrunch under them? It could certainly be. Another big social website Mashable also syndicates content to AOL rival Yahoo, so will Yahoo now start looking for another acquisition to bolster their news section?

More details at the TechCrunch Press Release and AOL Corporate website.

Is AOL Buying TechCrunch?

AOL is one of the oldest companies in the web industry but its services have failed to evolve with time. Therefore, it took to acquiring services to compensate for the losses. In past AOL has acquired Weblogs Inc., the company behind the popular gadget review website Engadget. AOL has seen serious drops in traffic and this acquisition allowed it to compensate for the losses it was making with the existing business. Taking a further step, AOL is probably out to buy TechCrunch, the acclaimed tech blog focused on startups and industry news.

The announcement has not been made yet but the news is already out in the wild and can be seen  here on Techmeme. Tim Armstrong, the AOL CEO is about to make an appearance at the TechCrunch Disrupt  conference and will probably make the announcement too. However, we hope it is not a rumor like the last AOL-Mashable acquisition.

While Engadget is regarded as the top gadget blog, TechCrunch is the top tech blog and this acquisition will give AOL a stronghold over two of the most popular niche in the world of blogging. There is no final word on the deal and there is a very good chance that it falls apart. TechCrunch disrupt will decide soon.