Friday, August 19, 2011

Wall Street Sours on Patch

Patch, the online community news outlet acquired by AOL in 2009, is seen by some Wall Street analysts as a drag on the parent company’s earnings. According to this story by Verne G. Kopytof in The New York Times, “Eliminating the money-losing service would free $160 million and lift AOL into profitability.”

“AOL’s decline in value is so great that analysts point out that the company may be worth more now broken into pieces and sold.”

That being said, Patch still has a pretty strong ally in the company. It was started by Tim Armstrong, the AOL Chairman and CEO, before he joined the company. Patch is part of his strategy for transforming AOL from an Internet access business to a content provider in order to return the company to profitability. He now expects that to take another two years.

“Frankly, AOL hasn’t delivered on its promise yet,” said Sameet Sinha, an analyst with B. Riley & Company. “It’s just been a series of stumbles.”
blog comments powered by Disqus